Jean-François FALLACHER, CEO Orange Romania told Nine O’Clock that he hopes the potential future regulations and taxes will leave sufficient financial room for operators to continue to invest on domestic market.
Mr. Fallacher, you have been representing Orange Group on the local market for almost three years already. All this time, have you noticed any change in Romanian customer profile?
Romanian customer profile has definitely changed over time. To demonstrate this we can make a comparison between the 1997 client, for whom initiating a phone call was more than enough, and the 2014 client, who uses new and improved technologies that allow him not only call and texting, but also access to the internet, email, social networks everywhere, anytime, on all kind of devices.
Nowadays the customers are becoming more and more digital; a bigger percentage choose to make the daily transactions on internet: seeking information, reserving a flight, paying invoices, sending pictures to friends and family, etc.
Another recent trend we’ve started to notice is that of consumers that are choosing subscriptions over prepay plans. They are taking commitments with operators and use prepay cards less. And this is closely linked to the increase of smartphones adoption, the Romanians’ interest in buying practical and user friendly devices. Because in subscriptions the smartphones are subsidized and people don’t pay them at their market price, the customers choose to shift from prepay cards to subscriptions.
We also noticed that for Romanians is very important to have the right number of resources for their needs and budget and also the value for money – the certainty that their money were invested best, in order to receive the best possible benefits.
In Q3 2013 financial year, the company increased the revenues and the customer base. With the launch of Orange TV, the operator’s offer appears complete. What are your estimations for the entire 2013 fiscal year and what are your expectations for this start of the year?
2013 was indeed a good and very busy year for us. 2013 is the year we entered the TV market by offering high quality multiscreen television. We are offering not only a classical TV service, but also TV for smartphones or tablets. And we believe this is the future: people will watch more and more TV in different ways, on multiple devices, anytime, anywhere, on the move.
In the first 9 months of the year we recorded positive financial results and consolidated our position as market leader, both in terms of market and value share. The financial results for the entire 2013 will be announced at the beginning of March 2014, but I expect them to continue the recovery trend which started at the end of 2012.
Last year you were focused on network modernization especially. What are the goals for this year?
Investing in the modernization of the network is one of our constant priorities. In fact, every year, o big percentage of our turnover goes into improving our network.
In 2012 we extended 3G+ coverage to national level and launched 4G. We have started with Bucharest and Prahova Valley. In 2013 we concentrated our efforts in the cities, in order to offer our urban customers the best quality voice and data services. 2013 was also the first year for 4G. We covered with 4G the entire capital city, we enriched our portfolio of 4G smartphones and we prepared for 2014.
In 2014 the key word, in terms of network, is 4G. And 4G will definitely be a priority for us this year. Starting April we will be able to use the spectrum in the 2600 MHz frequency and offer our customers 4G services at their best capabilities.
In the same time, we will continue to sustain the quality of the whole network, 2G and 3G included.
Telecom is a business that requires massive investments in order to remain competitive. How do you see the involvement of Romanian authorities, as far as the regulatory and licensing framework is concerned?
First of all, I would like to state that stability, predictability and real dialogue with the authorities are the most important factors that positively influence the Romanian economy. It is very important to establish a stronger dialogue between the authorities and the business representatives, so that our point of view, as stakeholders, can be taken into account when preparing new laws or regulations. We, as investors, are genuinely interested to the development of the country and need stability and predictability to run our businesses and create value for Romania.
From the regulatory point of view, 2014 is a challenging year with the upcoming of mobile termination rates and also the new announced taxes. Romania already has the lowest tariffs in Europe, while the offers from all operators are really competitive. Therefore, we hope that the potential future regulations and taxes will leave sufficient financial room for operators to continue to invest in the development of more efficient networks and in providing innovative services to Romanians.
Crisis is a good opportunity for some players to grow their business by acquiring smaller players. How do you see the local telecom market comparing it to the external one? What is your estimation about the value of the domestic market and how do you see its evolution in 2014?
Romanian market is very dynamic and challenging, but with a large opening towards Western trends, which makes it one of the most advanced in Europe. Romanians’ consumption habits are quite similar to that of other European countries; they have a great appetite for communication services, entertainment, access to social networks, as well as mobile applications. That is why we are still witnessing huge increases in the adoption rate for mobile internet doubled by important growth of smartphone sales, but also a big interest for tablets, connected objects and new and useful applications, meant to make life easier.
We expect that the domestic market will continue to consolidate.
As this year the new MTR will continue the descendent trend, revenues from mobile voice are also expected to decrease across the entire telecom industry. In the same time, the creation of unforeseen new taxes will affect the operators’ capacity to invest. In this context operators will have to find new ways to keep their market share and, in the same time, to invest and grow further.
We are confident that our strategy, focused on best customer experience, 4G services, TV services will pay off and we will, of course, continue to run our business in an efficient, optimized way, in order to be able to cope with the new challenging market conditions.
The company does not resume at telecommunication activity, but also combines it with Corporate Responsibility actions. Can you tell us more about this topic, referring to the activity in Romania?
Orange Romania’s commitment for CSR goes back in ’97, when the company settled the basis of its first educational initiative addressed to Bucharest Politechnica University students. Over the years, the program has reached new dimensions, both in terms of content and addressability; today, Orange Educational Program is one of the most powerful CSR projects that we run, since every year, hundreds of students learn from our best people, while getting in touch with real business environment.
Besides this, constant dialogue with our stakeholders leaded us to defining four major CSR pillars that are relevant and consistent with our mission and values. We aim to help people understand better new technologies benefits and to coach our customers into using them in their best interest. At the same time, as a telecom operator, we have a strong responsibility in informing our customers regarding online safety and in providing reliable tools to protect children in the digital environment.
Since our business is continuously expanding, we keep focused on the quality and sustainability of our investments and this is also translated into high-end, energy efficient infrastructure.
Last, but not least, starting 2012, our commitment for community development and sustainable growth is also reflected in Orange Romania Foundation activities, which runs projects aimed to enable the social integration of people with sensory disabilities, by facilitating them access to education, culture and health services.