DT Editor James Barton caught up with Orange’s Senior EVP of AMEA Marc Rennard to discuss the most important trends in the region, and what we’re likely to see on the agenda at the continent’s foremost telecoms event.
Which technologies were major talking points at last year’s AfricaCom, and which have proven to be major trends across the last year?
The growth in 3G, both in terms of providing network coverage across the AMEA region, and the growth in smartphone adoption, created a lot of buzz at last year’s event, and I expect this will continue to be a major topic of conversation this year as well.
It’s an exciting time to be operating in Africa and the Middle East because the region is booming. Take for example our business in Africa. Orange operates in 20 countries across the AMEA region, and we now have 3G coverage across all of our operations. We are seeing a boost of 3G data usage across all of these markets, and just in this last quarter, we added over 2.5 million net additions to our customer base. Orange customers in this region now represent over 38% of the group’s customer base.
In light of this, what do you expect to see on the agenda this year? What will be the key challenges across the next year?
With the availability of 3G, I think the market will witness a huge development in areas such as infrastructure-as-a-service, or software-as-a-service because there are more opportunities for an operator to drive value through mutualising and providing low-cost solutions for businesses across Africa.
Data monetisation and usage will remain a key trend across the AMEA region in line with the continuing adoption of mobile phones and smartphones. There is huge growth potential in the mobile economy. Basic voice services continue to grow in line with population growth and a burgeoning middle class who have a strong appetite for mobile services. Added to this, the explosion of cheaper internet-enabled mobile devices is also driving mobile data usage upwards.
High customer churn is an on-going challenge in this region so Orange is continually challenging itself to develop new services for customers that will help ensure that it is our SIM card and service that African customers choose above the others. Our strategy focuses on providing a differentiated suite of services that combine the right service, at the right price. An example of this is Orange Emergency Credit. It provides our customers with access to emergency credit via a small loan to ensure that they’re never without access to communication. The service is used over 200 million times a month, and this year, we reached a major milestone of reaching 20 million customers and providing over US$3billion worth of loans.
This year, Orange introduced a range of smartphones designed specifically for the needs of consumers in Africa, which drew on an extensive portfolio of operator services. Do you think this model is likely to be imitated by other operators as a means of driving traffic on their services?
We definitely expect to see more operators offering cheaper internet-enabled smartphones but that in our view is a good thing overall as with greater smartphone adoption will also come greater mobile and data usage.
However, just offering a cheap smartphone is simply not enough to differentiate an operator in the market. I believe Orange has been more successful because we have, firstly, really focused on providing a good selection of affordable devices to offer to customers but on top of that, we have developed very specific services for these smartphones that provide a lot of added value to customers. For example, with Orange, customers can access a range of payment solutions via Orange Money. We have developed self-care services like MyOrange. We also have unique services that our customers are really passionate about, such as applications like Dailymotion and Football Fan Club, just to highlight a few.
This year, Orange will also be the first operator to launch a consumer cloud solution, starting in Jordan and Egypt. We clearly see the same demand and appetite for mobile services in AMEA as we do in the West.
Importantly, we are also opening our APIs and identifying AMEA developers to partner with because we believe that we have a major role to play in encouraging innovation at a local level.
The lack of existing infrastructure in many African markets means that service deployment is largely consumer-driven, but it’s clear that less densely populated areas can provide surprising revenue growth. With that in mind, how do you expect to see operators upgrading their networks to reach more customers?
We’re investing over 17.5% of CAPEX in network investment for the AMEA region. Just in the first half of 2014, we’ve already rolled out over 2000 2G/3G sites.
Broadband requires significant transmission capacities that have not been sufficiently developed in Africa to date. For Orange, a top priority is to effectively connect the continent to the major international networks so as to strengthen connectivity with other continents and to encourage broadband access. In 2012, in partnership with other operators in the region, Orange implemented LION2 and the ACE cable in the first thirteen countries. These two new submarine cables are designed to break the digital isolation of the Indian Ocean islands and West Africa.
Will 4G rollouts become more expansive?
4G will come but in time. Orange will roll out 3G by the end of 2015 in all Orange countries in Africa and the Middle East and will provide mobile phone coverage to 80% of the population.
Maybe NFV will become increasingly commonplace in Africa?
Again, this is something that we see will roll out in AMEA but in time.