Orange looks on the bright side - View from the Top

Telecommunications International, Feb, 2002 by Matthew Secker

It's probably the most famous strapline in mobile marketing history -- 'the future's bright, the future's Orange'. But after France Telecom's acquisition of Orange plc assets last year, the future is not only projected as being bright, but decidedly big as well.

Jean Francois Pontal, CEO of Orange, believes that the mobile operator -- with operations in 20 countries -- is now in a position to rival pan-European operator Vodafone. Moreover, it can now push for better contract deals with manufacturers. "The original Orange and the France Telecom mobile arm can now jointly buy and share 3G equipment," says Pontal. "The same suppliers can also be used, which leads to better deals for us.

Pontal further argues that the Orange member companies can draw on the strengths of each other. "Orange UK is the best in the world at customer care, while Orange France prevails in the business market. These positive cultures and experiences, when combined, make the company as a whole more innovative."

But it's quality of service, rather than replicating offerings already in the marketplace, that Pontal is keen to implement. "Service distinction will be hard to find in the future, so our major goal must be to continue to provide a customer experience that is second to none."

Some might argue that Pontal has a tough act to follow -- after all, he succeeded Hans Snook, the charismatic figure behind the hugely successful Orange branding campaign. "Hans had a very good vision and intuitive view of what the consumer wanted. His way of thinking has spread throughout the company and the very strong team that he had around him remains in place. This means that the impact of his departure was significantly reduced and my succession was not daunting. Fundamentally, the Orange culture lies within the whole group, rather than in just one man."

Prior to his appointment as Orange CEO in May 2000, Pontal was group executive vice president for the mass market products and services division at France Telecom. He sums up his management style as 'fitting in well with Orange traditions in that it is relaxed but focussed' and claims that the Orange evolution has been a smooth one, despite being owned by four companies over the last three years. Hong Kong's Hutchison Whampoa (Orange's original major shareholder) decided to sell its interests to Germany's Mannesmann Mobilfunk, which was later acquired by Vodafone. The UK operator had to then sell Orange to France Telecom in order to satisfy regulator concerns. "This all happened during a very short period of time, during which the company maintained a strong customer focus and launched new services," argues Pontal.

He further believes that with France Telecom, the original Orange has finally found a 'firm shoulder to lean on' in the long term as its new owner acknowledges that it has a brand which is 'interesting, unique and worth preserving'. This led to France Telecom's decision to merge all of its mobile activities under that name and management once it had gained full control of Orange last year, an amalgamation that went a lot smoother than Pontal originally envisaged. "The old Orange and the France Telecom mobile arm appeared to have contrasting cultural differences, but, in the end, it was surprisingly easy to do."

Pontal considers that this was due to two factors. The first was the decision to immediately float the new Orange. This meant that both the traditional Orange and the France Telecom mobile teams had to instantly unite and work together in order to achieve a common strategy, business plan and commitment to the market. Secondly, the France Telecom mobile workforce was 'happy' to quickly embrace the Orange brand, company and values.

He is also keen to argue that Orange has not been hugely affected by the slump in the telecoms industry. "A lot of people fail to realise [or make the distinction] that the mobile operator sector has not witnessed as much damage as the handset or equipment industry. In short, the mobile business remains strong."

Indeed, Orange's financials do appear encouraging with EBITDA for the first half of 2001 up 80 per cent to [euro]1.63 bn compared with the same period the previous year -- which is almost the same amount that it achieved in 2000 overall. The financials for both years represent the combined interests of old Orange and France Telecom's original mobile interests, with 2000 figures being pro-farina (in other words, what the enlarged and new Orange financials would have been had it been in operation throughout this period). Pontal states that Orange's significant EBITDA increase is due to improved market performance across the board with a particularly strong performance in the rest of the world. He also predicts that Orange's EBIDTA for the whole of 2001 will be above independent analyst forecast projections of [euro]2.9 bn.

What does Pontal think the future will hold for the new Orange? "Overall, our strategy is growth and we see the usage of mobile spreading, and a completely new field of development from WAP, GPRS and 3G services."