Orange Pushes into Fresh Territory

But Connectivity Remains the Foundation for Growth

Last week, at its annual Europe strategy day, Orange shared the findings of a report from the Boston Consulting Group that named it the most innovative network operator for 2018.

Although Orange only placed 19th on the overall list — unsurprisingly, Apple and Google took the top two spots — it enjoyed an impressive rise of 25 places from 2017. Ranking ahead of AT&T, NTT DoCoMo, Disney, Huawei and Verizon is a noteworthy achievement. Orange also emerged as the leading innovator in Europe, according to the report (see below).

Telecom operators are rarely recognised for their fresh thinking and I’ve argued for a while that some of them face tricky decisions about how to position themselves in the future: do they continue as enablers for others by offering the best connectivity or opt for a more influential role in consumers’ lives by investing strongly in new technologies?

The event highlighted Orange’s clear ambition to make an impact outside its traditional focus areas. A good example is the launch of a virtual assistant called Djingo, planned for later in 2018. Djingo’s main purpose will be to allow customers to interact with all Orange content and services. Over time, artificial intelligence will learn from users’ behaviour to make the service more powerful.

A major challenge raised at the event is how Djingo will compete with platforms that are already well established like Amazon’s Alexa, Apple’s Siri and Google Assistant. Each has greater scale and far bigger budgets for research and development; Orange has tried to address this in part by teaming up with Deutsche Telekom to develop its virtual assistant.

However, according to Gervais Pellissier, executive director of Orange’s European operations, operators still hold the trump card in two principal areas: localisation and privacy. In his view, a local market presence allows Orange to gain an edge over global rivals less willing or able to differentiate. But this will also come at a cost, as tailoring the service, particularly to support local languages, will take time and resources.

Mr Pellissier guaranteed that Orange will only ever use customer data to enhance its services or create more attractive offers to its subscribers. This contrasts with Internet players, whose business models are based on earning revenue from personal information. It could prove an important factor among privacy-conscious consumers.

In November 2017, Orange debuted its banking service, hoping to bring disruption to a different sector. Initially available in France, the service will expand into other markets during the coming years. Spain is likely to be next according to CEO Laurent Paillassot, probably in the first quarter of 2019.

Orange Bank delivers several novel features and it could resonate well with people using banking services for the first time and the youth market. But this is an industry where churn is notoriously low, so I believe the company would do well to introduce attractive bundles to help it reach its target of 2 million customers within 10 years.

The event also showcased other areas where the operator is trying to differentiate, including a smart city pilot in Romania, security solutions for households in Spain and the sale of gas and electricity in Poland.

It’s clear that Orange aspires to be much more than just the glue that sticks together the technologies of others, but the operator stressed that connectivity still remains the core pillar of its strategy. Mr Pellissier also trumpeted achievements in its fixed-line and mobile networks, echoing the sentiment from its recent investor day (see Focus on Network Leadership Bears Fruit for Orange).

Orange has LTE leadership in six of the eight European markets in which it operates and has connected 25 million households in the region with fibre broadband. This investment, it says, is boosting sales of bundled telecom services: nearly six in 10 customers in France now subscribe to a multiplay package, according to the operator, and this rises to more than eight in 10 in Spain.

On the challenge of moving into new areas while staying true to its roots, Orange appears to be striking the right balance.

Click on the graphic for a larger version.