Stéphane Richard: "We must not destabilize Orange outdoor maelstrom sector"
In an interview with "Echos", Stéphane Richard returns to his two years as CEO of Orange and his willingness to continue to lead the group. He also discussed the possibility of a merger with Deutsche Telekom, as well as the acquisition of SFR and the impact that could have the operation for his group.
What are your chances of being reappointed to the Orange head?
It is the Board of Directors to decide and I do not want to prejudge its decision. I am clearly applicant for renewal of my mandate as I think I can be useful to the company and my motivation to serve is greater than ever. It is true that Tapie is a hazard that I could have done without me. But I want to reiterate that I challenge my block indictment and it has nothing to do with Orange. Does this can hinder me in carrying out my duties, and interfere with Orange? The answer is clearly no, and I remember that the board is organized to ensure at all times that this is indeed the case.
Basically, the question is: should destabilize the group, in the maelstrom of the sector, a matter which does not concern Orange? The vast majority of employees and shareholders do not understand.
Between the increase in suicides and revelations of "World" in cooperation with the DGSE, yet you had a tough week ...
On the tracks, we did not learn much. Yes, we have relationships with government services in the strict legal framework and under the control of judges. I do not feel concerned, it shows rather that Orange is a strategic business.
Orange, as you know, was more than any other company traumatized by the issue of suicide. We have created structures prevention and extraordinary audit our prevention devices constantly. It is true that we are seeing an increase in cases since the beginning of the year. At this stage, it would be unwise to establish a link between this succession of individual tragedies, none of which has occurred in the workplace, and the situation of the company. Expertise is in progress on some cases. What is clear is that I am extremely vigilant and in constant contact with our HR teams and the social partners to ensure the relevance of our devices.
Leave yourself an Orange in better condition than the one you found when you took office as CEO in March 2010?
From the point of view of morale, membership of employees, the pride of belonging to the group, I really think so. Here people have found the motivation to fight for their flag. Our international environment, the recession in Europe and political instability in Africa we have not been favorable. In France, we have fared better than others to the arrival of the fourth operator, even if the shock was violent. In this context, I think our team can be proud of what has been accomplished.
You have, however, been heavily criticized the decision to sign a contract with 3G roaming Free Mobile, which could well have the best network of France since its inception ...
I claim the signature of the roaming agreement. When I see that Bouygues Telecom intends to sell its network Free Mobile to one billion euros, that is to say a little more than a year of roaming charges when we have not stopped repeat, in defiance of the evidence, that the roaming charges were wasted, there is plenty to smile about. We only protect our interests in a situation created by the political choices we have always denounced. I even think we protected the sector in taking this decision. If we did not, ARCEP (Constable Telecom, Ed) would have required operators through a dispute settlement, make an offer roaming. Free Mobile could allow competition to its advantage. In total, the roaming charges would have given him an additional advantage for lower prices.
Orange title has fallen by 40% since March 2010 ...
After declining prices of 30% in the mobile industry and a fixed cost, it does not really surprising. Our American, Asian and even European competitors have not undergone such shock and fared better so far. It would certainly have announced 20,000 layoffs in 2012, this would have an immediate impact on the course. For once, we could talk about layoffs fellows. These are not my values. I assume the conditions in which the adaptation of Orange at the new market in France has been made and will continue to be, that is to say, in respect of the social pact.
For the rest, whether our strategic priorities, our investment in very high speed, the quality of our innovation and global reach of Orange, I am proud of the decisions that were taken, which have never been challenged by the markets and eventually, I'm sure, being fully recognized.
You do not have the means to your ambitions of conquest in Africa?
Telecoms are very capital intensive. The license just won the Qataris in Myanmar cost them 1 billion euros, before you deploy any antenna! Orange did not have the opportunity to € 20 billion to invest in acquisitions. But we still took positions in four new countries since my arrival in the Democratic Republic of Congo, Morocco, Iraq and Tunisia. We also strengthened Egypt, which works well despite geopolitical events. Orange rose from 60 million subscribers in Africa and the Middle East to over 100 million. Our African strategy was reinforced, even though I wish she was more. I believe that our African positions are a great strength to the group. Africa remains a priority for us. Besides, look at the future: it is on this continent that we will see greater economic and population growth in the next twenty years.
What are the prospects for Orange?
One of the priorities in my eyes for the future of Orange concerning technological modernization and deployment of future networks: the mobile with 4G first and then in a few years the 5G, and fixed with fiber. It will also have to ensure the migration of networks to "all IP", that is to say integrate more software functions and more cloud. This network architecture change is essential at a time when technological boundaries disappear between the routing of voice and the data. There is considerable investment for the group, several billion euros in the coming years. This is not only important for Orange but also for the country: it is to provide state of the art telecom networks, a key to the competitiveness of our economy. In addition to modernizing our networks, we have four major projects. First there was the digitalisation of customer relations and internal operations to the company, enabling us to achieve increased competitiveness and better use of data that we have on our customers to serve them better. International, where we continue to pursue our expansion, particularly in Africa and the Middle East. Social modernization in France, which I am very fond. And finally, the creation of services and business models of the Internet age.
How can evolve Orange socially?
By 2020, there will be 30,000 retirements on a total of 95,000 employees in France. We will replace some, but numbers will necessarily decrease. This is a true business transformation that will have support to improve the overall competitiveness while maintaining the support of our employees. This requires the implementation of key projects such as training, technical trades regeneration, an employment policy oriented care for young and employee ownership. The modernization of the organization must be in the idea of progress, and not in pain as has been the case in the past.
This policy is consistent with the acceleration of digitization within the company, which should simplify the way we work, both internally but also in terms of customer relations. In five years, the online channel has taken a critical weight. We can save money while modernizing. The mountains of data we have about our customers is also an asset that needs to be better exploited to offer more services and better deals.
"Orange is the first operator of the digital age", what does that mean?
It is a question of business model and innovation. Everything remains to be done in services. Facebook and Google will not replace us as operators, even if Google makes optical fiber in some American cities. They invented new services, based on the economic model of free and audience. Our challenge is to find a place for services on the pay model, more durable and more consistent with what we can do. We have already identified services that will allow us to enhance the economy of access. In the "mobile banking", it is expected that half of the physical payments in Europe will be via a smartphone by 2020. In the well-being and health, we can integrate the most relevant objects connected with our user interface and our payment platform. Finally, entertainment and image, we will not remain passive transport content, including through our platform Dailymotion.
Will you be the operator will Netflix in its box in France?
I do not know where Netflix account issue, what will be its tax structure, what commitments will be made as to the chronology of the media, the quota of French works, participation in the funding of broadcasting. I await clarification before I decide.
How to position the group in the consolidation trend that is emerging for the sector?
The consolidation is part of projects which we will address in the next five years. In Europe, for now, there has been reconciliation projects within national markets. This is the result of competition at all-will which has been encouraged in our industry and has led to lower prices and crushing margins for operators. We went in the alert level compared to the investments will make operators for scanning and very high speed. Consolidation is inevitable. Look also what is happening in France, Germany and Spain. It will affect the mobile sector but also take the form of convergence between fixed and mobile. Orange will participate. There are countries in Europe where the only mobile for now, and where it will be necessary that we move.
Do you believe in the arrival of large foreign operators such as America Movil ATT or Europe?
We talk a lot, but I do not see anything coming. In terms of U.S. carriers, I believe they now have other issues to deal with on their domestic market. They ate their white bread, while the war peak price. America Movil is less inclined than before to conquer Europe. The Chinese have too much to do in a market of over one billion users to look at us. For me it is a bit of a myth, the arrival of foreign operators in Europe.
A rapprochement with Deutsche Telekom is still relevant?
Today, the conditions are not met because there is an imbalance of the respective weights. If there was a marriage should be between equals. Note nonetheless that the U.S. subsidiary T-Mobile weighs a quarter of turnover of Deutsche Telekom. Maybe we'll talk Does this matter if Deutsche Telekom withdrew from the U.S. market and becomes a pure European player.
Bouygues has not renounced buy SFR. Such a merger would not it more dangerous for a takeover by Orange Numericable?
You can not both claim that industry consolidation is needed in Europe and, as soon as it occurs in France, say we do not want. We need strong competitors so they can achieve with us the necessary investment in new networks. Then no one has ever shown that 4 operators, it was better than 3: China, there is 3 operators for 1.3 billion people! The new group Bouygues, SFR happen momentarily before us market share . And then? This would be a great hare for us. Especially that the merger would be long and difficult. During this period, the stable point will Orange Marketplace.
Redemption SFR Numericable could it have a positive impact on Orange?
The subject is clearly not completely closed with the cons-offer Bouygues ... but to answer your question a wedding SFR / Numericable pose a number of questions that Orange will be especially vigilant if the operation had to be done. It should also probably lead Bouygues Telecom to review its strategic partners, such as the very high speed, today Numericable or sharing mobile network today with SFR. Orange restored a quality dialogue with Bouygues past few months. We can strengthen this dialogue in this case. But again the games do not seem to have completely done.
What problems raises Numericable SFR-operation?
I see three. While the new set customer base will be substantially equivalent to ours in broadband, it does not seem normal to have a cable that is not subject to any regulation while copper and fiber are fully regulated. We'll ask the regulated local loop cable to the controller access. This is a hot topic throughout Europe and Belgium already decided the regulation of cable like copper. Then this operation the question of access to content and pay TV. Vivendi is at first the main shareholder in the group with a 32% stake. I hope that the Competition Authority will be as strict as it was with us when we had our strings Orange Cinema Series and Orange Sport. In addition, there will be no reason Numericable is the only one allowed to unbundle CanalSat channels to make custom bouquets. We will ensure that we deliver to the competitive parameters flat cable and high speed so that with the birth of this new operator we get fair conditions. Finally, this operation poses the problem of investment in fiber SFR especially in areas where cable is already installed.
With the acquisition of SFR Numericable, the market remains four operators ...
This transaction does not in fact not the problem of mobile in France and does not allow the sector to find a new equilibrium. Now, with the amount of debt that the combined set would have to bear, I do not think they have the means to start a new price war.