Orange squeezed but pumps up the Euros in a significant investment boost
If proof were needed that stiff competition drives investment (rather than snuffs it out) then Orange has supplied a useful case study. Europe’s fifth largest telco has announced that it’s going to invest €15 billion in network upgrades in France to help it counter the seismic impact of Iliad’s Free and all that flowed from its arrival. Launched in 2012, Free Mobile at first traumatised and then galvanized the French telecoms market, leading to ripple of M&A activity (some of it successful) that’s seen French telecoms reinvent itself.
Orange had originally run around in small circles asking for competitive protection and the French government responded, promising that order would be restored and jobs protected. Ironically Xavier Niel, Iliad’s swashbuckling CEO had unleashed his cut-price telephony with the assistance of Orange itself, which provided wholesale mobile network capacity as Iliad built out its own network.
Now Orange has a recovery plan. According to Orange CEO and chairman Stéphane Richard it will plough much of its €15 billion new investment cash into extending fibre towards the edge of its network to boost broadband speeds, so that by 2022 it will have connected 20 million homes with a view to tripling the average data speeds enjoyed by its customers on both fixed and mobile. That, it calculates, will give it a sustainable advantage, enabling it to keep the upper end of the French market happy and sticky, whatever Xavier Niel and the rest of the increasingly dangerous-looking French competition intend to do.
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