Project Study On France Telecom

PROJECT STUDY ON PRESENTED BY : ABHISHEK BANSAL NISHANT PALIWAL RAKHEE SONKHLA VANDANA MISHRA KUMAR MANISH

FRANCE TELECOM

INTRODUCTION  France Telecom is the leading broadband Internet service provider and the number three mobile operator in Europe and is a worldwide leader in telecommunication services for multinational corporations.  Orange is a subsidiary of France Telecom and provider of mobile communications services.  Services in 23 countries worldwide, including 13 countries in Europe.

INTRODUCTION • Serves more than 177 million customers in five continents • Provides mobile services and ISP under brand name ORANGE • Consolidated sales of 52.9 billion Euros in 2007 • Current CEO is Didier Lombard.

HISTORY • France télécom was Known as Direction Générale des Télécommunications upto 1988. • Became autonomous in 1990. • Head quarters being in PARIS. • Brand ORANGE was created in 1994 for Hutchison Telecom's UK mobile phone network, which was acquired by France Telecom in August 2000.

Services The four key platforms France Télécom operates are:  Fixed line telephone, mainly in France and Poland.  Broadband access.  Mobile phone telephony.  IPTV, though currently only in France and Spain, with MaLigne TV, now known as Orange TV.

NExT

(New Experience in

Telecommunications)

  In 2005, France Telecom launched NExT, the Group’s

transformation plan to become the leading operator for new telecommunications services  . It is a 3-year plan for transformation that will enable the Group’s customers to access a universe of enriched and simplified services and the Group to pursue its transformation as integrated operator. It is designed to make France Telecom the benchmark operator for new telecommunications services in Europe in terms of innovation, service quality and economic performance

Definition of customer o Mobile service customers o A mobile service customer is anyone holding a SIM card or anyone holding a prepaid card who has placed at least one call and has not passed the date after which it is contractually impossible to receive calls.

o Fixed-line telephony service customers o This number is the aggregate of standard analog lines and ISDN access lines in service (including fully unbundled lines), with each ISDN channel being treated as one line. ISDN: Integrated services digital network.

o Internet access customers o Internet access customers are those who have entered a monthly payment subscription contract as well as the active customers of free access accounts, i.e. access customers showing activity in the last month, identified by measurable consumption.

The Orange france offers Orange France offers four major types of products targeted at different categories of users:  Offers with subscription. Offers without commitment. The new multimedia Orange World offer. For businesses, the Orange Business Solutions offers.

Business segments  In order to reflect the change in the Group and the structure of its businesses, France Telecom has selected the following three business segments:  Personal Communication Services  (PCS) segment consists of the mobile telecommunication services in France, the United Kingdom, Spain, Poland and Rest of the World. It includes all the Orange subsidiaries, and the mobile operations of France Telecom España in Spain and TP Group in Poland (with its subsidiary PTK Centertel), and the other Group companies abroad;

 Home Communication Services

 (HCS) segment includes the fixed-line telecommunication activities (fixed-line telephony, Internet services, operator services) in France, Poland and the Rest of the World, as well as the distribution and support functions provided to the other segments of the France Telecom group;

 Enterprise Communication Service

 (ECS) segment holds the communication solutions and services dedicated to businesses in France and worldwide.

Orange Business Services  Orange Business Solutions” is a fully integrated entity that can meet the mobile and fixed-line communication needs of medium and large companies and government agencies.

 The “Orange Business Services” offer currently has three main plans:  “Solo”

 Intended for independent workers

 “Venture”  Intended for very small companies of up to 10 employees

 “Momentum”.

 Designed for larger-size companies that must be able to operate in a flexible manner and that need a plan that allows their employees to continue to work when they need to

Orange world  The Orange World portal offers a multitude of rich and diversified content.

Access to more than 60 live television channels 700,000 music titles, 3,000 videos over 200 games, Orange League 1, and the Top 14 in video. Introduction of the 3G+ in November 2006 and the HSUPA technology in September 2007 allowed an offer of high definition TV for unlimited viewing on mobile handsets.  Film, music and ringtone downloads from Warner Music, EMI, Sony/BMG, Universal Music, and Ministry of Sound      

As of December 31, 2007, Orange World had approximately 4.1 million active customers (compared with 3.1 million at December 31, 2006)

Table of all Group customers (as of December 31, in thousands, for controlled companies Mobile

2006

2007  

 

France

24,226

Europe (excluding France)

59,596

World (excluding Europe)

25,840

Total

Fixed

23,268 57,157 17,208 97,633

109,662 (Source: Informa Telecoms & Media ).

 

 

France

34,174

Europe (excluding France)

11,998

World (excluding Europe)

1,214

Total

Internet

1,304 48,681

47,386  

 

France

7,917

Europe (excluding France)

5,033

World (excluding Europe)

6,884 5,298

152

Total

Total

33,873 13,504

100 12,282

13,102  

 

France

66,318

Europe (excluding France)

76,625

64,025 75,959

World (excluding Europe)

27,206

18,612

Gsm and 3G covera ge of France teleco m

United kingdom players

Source: Enders Analysis, Broadband market in the United Kingdom, 3 rd quarter of 2007.

SIPOC

Source: Enders Analysis, Broadband market in the United Kingdom, 3 rd quarter of 2007.

Telecom value chain

STRATEGY

 France Telecom’s strategy is designed to respond to the changing telecommunications service sector which is being profoundly transformed, resulting in significant changes in the offer, usages and the competitive framework.

France Telecom believes that the main drivers of this transformation are:  Evolving technologies: general use of the IP protocol, broadband, mobility; development of multi-access handsets and network interoperability;  Evolving customers habit: growth in the consumption of audiovisual content, abundance, the customization of utilization contexts and services;  Changing industry structures and strategies, and more intense competitive pressures.

The Group’ s strategic priorities  Innovation is the Group’s top priority  France Telecom has structured this activity in a way that has no equivalent in terms of its competitors, by creating a network of Orange R&D centres called the

Orange Labs

“ ”, located right next to the places where the new trends are being designed (San Francisco, China) or right next to local needs (United Kingdom, Warsaw, Cairo, Jordan, Egypt).

 Broadband is at the heart of the innovation strategy.

 The second priority is service quality  Having the lowest claim rate, the highest broadband quality in Spain.

 The third priority  is to continue developing a strong and recognized brand and to have it bear fruit across the various markets.

 The fourth priority  is to continue improving our operational performance in order to continue reducing costs

 The fifth major priority

Sales, distribution and customer service  In metropolitan France, Orange France sells its products and services through a full range of retail circuits:  The France Telecom retail network, which had 684 points of sale as of December 31, 2007  Supermarkets and superstores.  About 1,000 independent distributors.  Own network of points of sale: 175 “Mobistore” stores.  Offers for Businesses are sold by specialized networks: Five Major Account Agencies.

2007

2006

2005

Market penetration rate in the United Kingdom(%) Total number of users in the United Kingdom(mn) Orange UK active customer(mn) Contracts (millions) Prepaid customers (millions) Market share of Orange UK (%)

117.8

116

110.6

71.7

70.3

65.1

15.6

15.3

14.9

5.6

5.0

5.0

10.0

10.4

9.9

21.5

21.8

22.1

Coverage of the Orange UK network

99.2

99.4

99.4

Source: Informa Telecoms & Media (3 rd quarter for 2007). Source: Orange UK.

SWOT ANALYSIS(by :datamonitor)

Strengths  Wide customer base  Orange has a wide customer reach in most of its markets. The company's subsidiary in France, Orange France, is the market leader with approximately 22.6 million registered customers in 2005.Orange UK has approximately 14.9 million customers.

 Strong brand image  The most significant strength of Orange is its brand equity. The company has been making efforts to build Orange as the company's leading global brand. The Orange brand, present in France since June 2001, benefited from a spontaneous recognition rate of 87% in the fourth quarter of 2005.

 Strong presence in European markets –

Communications services in 23 countries worldwide, including 13 countries in Europe.The company has controlling interests in Egypt (MobiNil) and minority interests in Portugal (Optimus), Austria (One), Senegal (Sonatel Mobiles), Mali (Ikatel), Equatorial Guinea (Getesa) and the

Weaknesses  Weakening mobile business in the UK and France – France Telecom's mobile telephony business in the UK and France has lost ground to competitors owing to ineffective strategies

 Weak presence in Asian markets  Asian countries represent a high growth market for the telecommunication industry. The company's weak presence in the high growing Asian market might limit its future operations and

Opportunities  3G technology – The global demand for 3G technology is on a rise.The number of users for high-speed data protocol 3G are estimated to rise from 600,000 at the end of 2003 to 240 million by 2009.

 Growth in European residential internet market – The residential internet market in Europe is expected to grow rapidly in the coming years.The broadband internet will reach more than 50% of households in Europe by 2007.

 FreeMove Alliance  The company will especially be able to attract

Threats Saturation in the European mobile market  European mobile markets have become saturated as a result of high penetration rates. In 2005, the market penetration in the UK, Spain, Netherlands, and Switzerland was 110.6%, 105.3%, 102%, 95.5% respectively. This means that most of the population in Europe now owns a mobile phone and there is little room for any future growth.

EU regulation on international roaming  In 2006, the European Commission announced the enactment of a new legislation by way of a regulation under Article 95 of the EU Treaty

REGULATION The national regulatory authorities (NRA)  The electronic communications sector is primarily governed by the Postal and Electronic

Communications Code (CPCE)  Autorité de Régulation des Communications Electroniques et des Postes (Arcep)  Agence nationale des fréquences (ANFR)  Autorité de Régulation des Mesures Techniques (ARMT) 

STATISTICS(2007) Group's stake in the capital: 100%

Personal communication services  Market penetration rate-- 88%  Orange network coverage -- 99%  Market share excluding MVNOs – 43.8%  Number of customers (000s)---24226  Number of broadband customers (000s)-7407

Home communication services Number of fixed line customers (000s) —22962 Number of Internet customers (000s)— 7917 Number of ADSL customers (000s)— 7296 Voice market share—71.9% ADSL market share—49.4%

FINANCIAL DATA

RECOMMENDATIONS  FRANCE TELECOM TO GAIN ITS LOST GROUND FROM THE COMPETITORS IT SHOULD FOCUS MORE ON STRENGTHENING ITS POSITION BY USING EFFECTIVE STRATEGIES..  FT SHOULD ALSO MAKE ITS PRESENCE IN ASIAN MARKETS AS THEY ARE HIGH GROWTH MARKETS e,g. INDIA AND CHINA  FT SHOULD ALSO DIVERSIFY ITSELF IN BROADBAND INTERNET WITH NEW TECHNOLOGIES LIKE WIMAX IN EUROPE …  AS EUROPE MARKET IS ON THE VERGE OF SATURATION AS PER THE LIFECYCLE STRATEGY FT SHOULD FOCUS ON LOWERING ITS COST AND REAP REVENUES…

BIBLIOGRAPHY

• • • • •

www.orangebusiness.com/mnc www.wikipedia.com www.francetelecom.com www.orange.com http://www.empirica.com/

• •

http:// BUSINESS INSIGHTS.COM UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 20-F Enders Analysis, Broadband market in the United Kingdom http://www.arcep.fr/index.php?id=1&L=1

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MERCI