Exhibit 15.1
Excerpt containing the pages and sections of the 2018 registration document that are incorporated by reference into the 2018 annual report on form 20-F (1)
(1) The following document contains certain pages and sections of the 2018 Registration Document which are being incorporated by reference into the 2018 Annual Report on Form 20-F of Orange. Where information within a subsection has been deleted, such deletion is indicated with a notation that such information has been redacted.
[REDACTED SECTION: CERTAIN TEXT THAT FOLLOWS HAS BEEN REDACTED.]
1.1. Overview
Orange is one of the world’s leading telecommunications operators with revenue of 41 billion euros and 151,000 employees worldwide, including 92,000 in France, at December 31, 2018. The Group served 264 million customers at December 31, 2018, of which 204 million mobile customers and 20 million fixed broadband customers. The Group is present in 27 countries. Orange is also a leading provider of telecommunication services to multinational companies, under the brand Orange Business Services. In March 2015, the Group presented its strategic plan, Essentials2020, which focuses on its customers’ expectations to ensure that they experience the best of the digital world and the power of its very high-speed broadband networks.
Orange SA is the parent company of the Orange group and also carries the bulk of the Group’s activities in France. Orange has been listed since 1997 on Euronext Paris (symbol: ORA) and on the New York Stock Exchange (symbol: ORAN).
1.1.1. Company identification
Company name: Orange
Registration location and registration number:
Paris Trade and Companies Register (Registre du commerce et des sociétés - RCS) 380 129 866 APE (principal activity) code: 6110Z
Date of incorporation and term:
Orange was incorporated as a French société anonyme on December 31, 1996 for a 99-year term. Barring early liquidation or extension, the Company will expire on December 31, 2095.
Registered office:
78, rue Olivier de Serres, 75015 Paris, France Telephone: +33 (0)1 44 44 22 22
Branches: None
Legal form and legislation applicable:
Orange is governed by French corporate law subject to specific laws governing the Company, notably Act 90-568 of July 2, 1990 on the organization of public postal services and France Télécom, as amended.
The regulations applicable to Orange as a result of its operations are described in Section 1.7 Regulation of activities.
Company purpose:
The Company’s corporate purpose, in France and abroad, specifically pursuant to the French Postal & Electronic Communications Code, shall be:
-to provide all electronic communication services in internal and international relations;
-to carry out activities related to public service and, in particular, to provide, where applicable, a universal telecommunications service and other mandatory services;
-to establish, develop and operate all electronic communications networks open to the public necessary for providing said services and to interconnect the same with other French and foreign networks open to the public;
-to provide all other services, facilities, handset equipment, electronic communications networks, and to establish and operate all networks distributing audiovisual services, and especially radio, television and multimedia broadcasting services;
-to set up, acquire, rent or manage all real-estate or other assets and businesses, to lease, install and operate all structures, businesses, factories and workshops related to any of the purposes defined above;
-to obtain, acquire, operate or transfer all processes and patents related to any of the purposes defined above;
-to participate directly or indirectly in all transactions that may be related to any of the purposes defined above, through the creation of new companies or enterprises, the contribution, subscription or purchase of securities or corporate rights, acquisitions of interests, mergers, partnerships, or any other means;
-and more generally, all industrial, commercial and financial transactions, or transactions involving movable or fixed assets, that may be related directly or indirectly, in whole or in part, to any of the aforementioned corporate purposes, or to any similar or related purposes, or to any and all purposes that may enhance or develop the Company’s business.
1.1.2. History
Orange, formerly France Télécom, is France’s incumbent telecommunications operator. The Group has its origins in the Ministry for Mail, Telegraphs and Telephone, later to become the General Directorate of Telecommunications, which in 1990 was accorded the status of independent public entity and, on January 1, 1991, renamed France Télécom. On December 31, 1996, France Télécom became a société anonyme (limited company). In October 1997, France Télécom shares were listed on the Paris and New York stock exchanges, allowing the French government the disposal of 25% of its shares to the public and Group employees. Subsequently, the public sector gradually reduced its holding to 53%. The law of December 31, 2003 authorized the transfer of the Company to the private sector and between 2004 and 2008 the public sector sold a further 26% of the capital, and then again 4% in 2014 and 2015. At December 31, 2018, the French State retained 22.95% of the share capital, held either directly or jointly with Bpifrance Participations.
France Télécom’s area of activity and its regulatory and competitive environment have undergone significant changes since the 1990s. In a context of increased deregulation and competition, between 1999 and 2002, the Group pursued a strategy of developing new services and accelerated its international growth with a number of strategic investments. These included, in particular, acquiring the mobile operator Orange Plc and the Orange brand, which had been created in 1994, and taking a controlling stake in Poland’s incumbent operator, Telekomunikacja Polska.
Since 2005, the Group has expanded strategically in Spain by acquiring the mobile operator Amena, then in 2015 the fixed-line operator Jazztel. Spain is the Group’s second largest market, accounting for nearly 13% of consolidated revenue in 2018.
In parallel, the Group streamlined its asset portfolio by selling off non-strategic subsidiaries and holdings.
Over the last twelve years, the Group has pursued a policy of selective, value-creating acquisitions by concentrating on the markets in which it is already present.
Mainly targeting the emerging markets of Africa and the Middle East where the Group is historically present (in particular Cameroon, Côte d’Ivoire, Guinea, Jordan, Mali and Senegal), this strategy was implemented through the acquisition of Mobinil in Egypt (2010) and of Méditel in Morocco (2015) and more recently by the acquisition of a number of African operators (in Liberia, Burkina Faso, Sierra Leone and the Democratic Republic of the Congo) (2016).
It also resulted in the joint venture with Deutsche Telekom that combined UK activities under the EE brand (2010) followed by the disposal of EE in 2016, as well as the disposal of Orange Suisse (2012), Orange Dominicana (2014), Orange Armenia (2015) and Telkom Kenya (2016).
As part of its Enterprise Services and since the acquisition of Equant in 2000, Orange has been pursuing its strategy of becoming a global player in digital transformation and has accelerated its shift to services through a number of targeted acquisitions, notably in the fields of cyber security and Cloud services, such as those of Business & Decision and Basefarm in 2018.
Business diversification is one of the major pillars of the Orange group’s Essentials2020 strategy. The acquisition of Groupama Banque, now Orange Bank, in 2016, which launched its new banking offer in November 2017, illustrates the goal of diversifying into the mobile financial services sector.
In 2006, Orange became the Group’s main brand for Internet, television and mobile telephony services in the majority of countries where it operated, most importantly France and Spain. In 2013, the Company adopted the Orange name, offering the full range of its telephony services in France under the Orange brand. This policy continued with the adoption of the Orange brand by Telekomunikacja Polska in 2013, by Mobinil in Egypt, Mobistar in Belgium and Méditel in Morocco in 2016, and by several of the Group’s subsidiaries in Africa in 2017. Enterprise services in the world are offered under the brand Orange Business Services.
For more information on Orange’s strategy and its business model, see Section 1.2 Market, strategy and business model.
1.2. Market, strategy and business model
1.2.1. The global digital services market
The digital services market is a subsector of the broader Information and Communication Technologies (ICT) sector. It combines IT services and software, telecoms services, TV and video services, and Internet services. On the other hand, it does not include network equipment (1) and devices which are intermediate goods that automatically form part of the added value. The digital services market is an essential component of economic growth and accounts for significant value creation via the distribution of new services and new uses.
With growth of 4.5% in 2018, the global digital services market amounts to €3,383 billion and is continuing to grow steadily. The growth of this market is driven by the dynamic Internet services sector (up 13.6% in 2018) and IT and digital content (up 5.6% each). Revenue from telecoms services was €1,187 billion. It experienced moderate growth of 1.1% in 2018 (2).
Source : Idate - Digiworld yearbook 2019.
Market growth by region (2)
North America remains the top region in the world in the digital services market with 37% of worldwide revenue, ahead of the Asia-Pacific region at 29%, driven by its economic and industrial development. Europe comes next with 24% of the market but is gradually weakening, whereas Latin America (5%) and Africa (4.6%) account for 10% of the worldwide market combined.
Digital services growth slowed in emerging markets owing to constraints on purchasing power, competitive pressure and, sometimes, the quality of service. The Asia-Pacific market suffered a decline in demand in India and a substantial slowdown in China. Growth in sub-Saharan Africa will likely not exceed 5%. While Africa will account for 25% of the world’s population in 2050, compared with 17% in 2020, the potential of the Africa Middle East region, where the Orange Group is very present, remains strong in both access infrastructure and equipment. The digital ecosystem is currently being built in the region. It is emerging and adapting to local conditions in order to integrate IT in all areas of the economy (trade, agriculture, government, mobile payments, etc.).
Key trends and changes in telecoms services
The development of very high-speed fixed broadband and mobile and the high penetration of smartphones worldwide, lead to a growing demand for bandwidth (2).
The return to growth of telecommunications services which began in 2017 remains weak in Europe. The weight of telecommunications services is, therefore, trending downward in Europe due to strong competition between operators and the development of OTT services. The American market has also been in decline for the past two years, but while it is of comparable size, it generates twice as much revenue, traffic and investment. Lastly, growth in the rest of the world remains steadier, although there is an observable slowdown in emerging markets.
Convergence of services and market consolidation
Convergence, which provides a competitive advantage to operators with both fixed and mobile network infrastructures, continues to grow, particularly in Europe. It led to the development of so-called quadruple play offers (voice, Internet, television, mobile), as well as the growing use of WiFi in mobile networks.
The convergence of telecommunications and content operators is a feature specific to the North American and UK markets. In the United States, the acquisition by AT&T of the Time Warner media group, owner of television chains HBO and CNN, announced in June 2018, was approved by the competition authorities.
In Europe, the consolidation trend has slowed following mergers between telecoms operators in 2014-2015 which addressed the need for convergence and a reduction in the number of mobile operators. However, the merger between mobile operators Tele2 and T-Mobile in the Netherlands was approved by the European Commission at the end of November 2018. With respect to fixed/mobile convergence transactions, the merger of Vodafone and Liberty Global in Germany, Hungary, the Czech Republic and Romania, which was announced in May 2018, is underway. The merger of Tele2 and Telecom Hem in Sweden was approved by the European Commission in October 2018. In addition, in 2018, Iliad and its founder took a majority stake in the operator Eir in Ireland.
Network development and growth in telecommunication uses worldwide
While in Africa and the Middle East, Internet access networks are developing primarily via the deployment of mobile networks, in Europe, investment in networks has focused on very high-speed broadband access with the development of fixed-line fiber, 4G mobile network performance improvements and the first 5G tests. Concurrently, operators are upgrading their networks to make them more flexible and simpler to manage (thanks to virtualization) and more open (thanks to APIs).
Usage is continuing to grow under the combined effect of the deployment of new networks, the increase in capacity of existing networks and growth in the penetration rate of smartphones. The explosion in usage is mainly driven by the development of video and Internet services accessible via a multitude of screens (computers, smartphones, tablets, connected TVs, connected watches). Furthermore, the development of long-distance radio network technologies to connect low-consumption devices (LPWA) and 5G will allow an increase in the number of connected devices which is currently still quite low.
Consumer and company expectations
Digital technologies continue to gradually permeate all areas of daily life: family, home, well-being, entertainment, work, and money. More and more industries are being affected: domotics, the automotive sector, health, financial services, energy and retail. The big Internet players generate revenue through the monetization of data, collected and analyzed thanks to Big Data and artificial intelligence techniques.
In this context, consumers have strong expectations on the quality and reliability of the communication networks, but also on the protection of their personal data and on having a trusted relationship with their operator. In order to ensure the protection of citizens’ right to privacy, in May 2018, the European Union implemented the General Data Protection Regulation (GDPR), a new legal framework to protect personal data in Member States (see section 1.7 Regulation of telecom activities).
The digitization of companies (IoT, Big Data) improves their performance and effectiveness through a better understanding and management of customer relationships and of their internal processes. Furthermore, in the face of the increased threats of cyber-attacks, cyber-security needs are increasing. Businesses therefore need to be assisted in this double aspect of their transformation process.
Artificial Intelligence (AI) on the rise
Big Data, advances in algorithms and access to processing power at very low cost, in addition to investments by American and Asian IT giants, have accelerated the performance of artificial intelligence. Major global players like Amazon and Google are positioned in the personal assistant voice market which is still little developed in Europe.
The emergence of AI should substantially change consumer services as well as processes within companies. AI opens up opportunities to create new value-added services such as the development of chatbot solutions (software robot that speaks to a user) in customer relationships. It can substantially improve operational efficiency in almost all major business lines: customer relationships, as well as IT, marketing, support functions, etc.
1.2.2. The Orange group strategy
Launched in 2015, the strategic plan, Essentials2020, focuses on Orange’s ambition for 2020 to "provide its customers with an unmatched customer experience" by being ever-present to "connect every individual to what is essential to them". This involves providing exemplary basic services, quality and reliable access, customer connections at any time and from anywhere they want, as well as even more personalized options for services and offers.
The implementation of its Essentials2020 strategy has enabled Orange to generate revenue and EBITDA growth again.
Orange serves every kind of customer: those who focus above all else on price and those who have a particularly high-level of service expectation, whether private individuals, very small companies or multinationals. The Group can rely on a series of key strengths for the mission that it has set out. With its brand and its 151,000 employees at end-2018, it is present in Europe, Africa and the Middle East on the residential market, and everywhere in the world on the Enterprise market.
Orange’s ambition breaks down into five main drivers:
1. offering enriched connectivity;
2. reinventing the customer relationship;
3. building a company model that is both digital and caring;
4. supporting the transformation of business customers;
5. diversifying by capitalizing on its assets.
Moreover, the strategic plan will be achieved within the framework of a company that is digital, efficient and responsible.
1. Offering enriched connectivity
The multiplication of screens, the generalization of video on the Internet and customers’ growing need for online services and content has led to an explosion in usage and in mobile data traffic. Moreover, the digital revolution has created new customer expectations and has changed their behavior, making connectivity even more important. Offering an efficient network to all customers is no longer enough; services must now be tailored to each individual consumer and to each moment. Orange would like to offer richer connectivity to all its customers, whether retail or business.
In order to achieve its ambition, the Group invested €7.4 billion in 2018 in line with the annual objective announced for 2018. Clear priority is given to investments in very high-speed broadband, in order to respond to the explosion in traffic and meet customer expectations. These will allow Orange to develop broadband services, whether fixed or mobile, as well as convergence services in Europe. Investments are being made in particular in the following areas:
Development of very high-speed fixed broadband and of convergence
Fiber To The Home (FFTH) is a source of value creation for Orange, through the recovery of market share, customer loyalty and the improvement of the average revenue per user (ARPU). At the end of 2018, very high-speed fixed broadband accounted for 6.3 million customers and was up by 33% year-on-year.
The Group accelerated fiber deployment in 2018. At the end of 2018, there were 32.5 million very high-speed broadband connectable households (an increase of 5.9 million year-on-year, up by 22.4%), including 13.8 million in Spain, 11.8 million in France and 6.4 million in the rest of Europe.
Across Europe, the deployment of very high-speed fixed broadband networks provides a competitive advantage over fixed-mobile convergence where the Group is the leader with 10.9 million convergent customers at end-2018, up by 5.5% year-on-year, including 6.1 million in France, 3.1 million in Spain and 1.6 million elsewhere in Europe.
The Group’s Love convergent offers are available everywhere in Europe. Convergence also allows better service to be provided to business customers.
Rollout of very high-speed broadband mobile networks (4G and 4G+)
The development of very high-speed mobile broadband is continuing in all regions in which the Group is present and Orange continues to make significant investments in geographical coverage. Investments in 4G and 4G+ mobile services continued to enjoy sustained growth in 2018. The deployment of 4G sites accelerated in France, Spain and in Africa and the Middle East, particularly in Mali, Morocco, Senegal and Côte d’Ivoire. The impact of the Group’s investments in mobile networks in France is reflected in the results of Arcep’s 2018 annual survey which ranked Orange as number one in network quality for the eighth consecutive year.
Continuation of network modernization
In anticipation of the future needs of its customers, the Group is upgrading its networks to make them more agile and automatically adaptable. Orange is thus continuing to drive the transition of its networks towards all-IP, the Cloud and the virtualization of networking functions, with the goal of being able to make them programmable in real time and dynamically, based on the evolution of traffic and needs. Orange has also begun using its expertise in artificial intelligence to improve the operational effectiveness of its networks and of its information system.
Orange is a world leader in the submarine cables market with a 450,000 kilometers network, i.e., 10 times the circumference of the Earth (either wholly-owned or held through international consortiums). The Internet and most international communications (over 99% of traffic) use these submarine cables. In 2018, Orange contributed to the deployment of the PEACE cable (Pakistan & East Africa Connecting Europe). It is 12,000 kilometers long and will connect Pakistan, Djibouti, Kenya, Egypt and France and later South Africa. It will strengthen the ties between the planet’s three most-populated continents.
The Group is also preparing for the arrival of 5G: it is well-suited to new mobile Internet uses and to the Internet of Things and will also enable the emergence of new economic models. In 2018, Orange carried out the first conclusive 5G technical tests in France and in Europe. The Group will launch a p-commercial phase in 2019 with the deployment of a 5G network in 17 cities in Europe: in France (Lille, Paris, Marseille and Nantes), Spain, Poland, Belgium, Luxembourg and Romania.
The Group’s ambitions for the future are to continue to lead in FTTH and its future developments and to be leader in 5G. It also wants to take advantage of new, related sales opportunities while continuing to optimize the cost of the core networks and their CO2 emissions.
For more information, see Sections 1.5.1 Orange’s networks and 1.6.1 Research and innovation.
An enriched content experience
The quality of the Group’s networks, particularly in very high-speed broadband, allows it to support the development of uses and respond to customer demands by offering a multi-screen experience. The development of uses is also based on access to quality content. In this area, the Group’s strategy involves strengthening its role as a distributor by focusing on content aggregation able to choose, highlight, package and offer attractive content meeting customer expectations in a simple and fluid manner.
In a context of increased competition in 2018 resulting, in particular, from the development and distribution of content via Internet (streamed content services consumed on TV screens) which no longer requires an operator TV decoder, Orange has continued its strategy of creating value through content.
For more information, see Section 1.4.6.2 Content activities.
2. Reinventing the customer relationship
The relationship with the customer is a key success factor, thanks to the direct link with the end-customer, especially when facing competition from OTT platforms. The Group aims therefore to have an impeccable relationship with its customers, thanks in particular to:
-the power of the Orange brand;
-the simplification of the customer journey by limiting the number of steps and intermediaries;
-the improvement of the customer experience.
Brand identity
Orange has a strong brand, ranked 65th in the Top 100 BrandZ ranking (source: Kantar Milwardbrown survey of the Top 100 Most Valuable Global Brands in 2018). The Orange brand fell three places compared to its 2017 ranking due to the strong growth of certain American and Chinese brands.
An optimized customer journey
With the development of very high-speed broadband and the rapid growth in smartphones offering customers autonomy, speed and continuous availability, mobile services are becoming essential to the customer relationship. The Group optimized its network of physical sales locations and rethought their role with the use of the smartphone which is increasingly becoming the key contact point, notably through the My Orange customer app. It enables customers to manage their Internet and mobile offerings from their smartphone, to contact Orange easily and to resolve problems. It currently has 18.5 million active users.
The physical stores now focus on more sophisticated customer reception and advice tasks, and on the most complex transactions. The concept is one of service excellence, provided in larger and more welcoming stores that are organized by theme (home, family, work, well-being and entertainment) and known as Smart Stores. Orange had 883 Smart Stores at the end of 2018. The Group thus offers an optimized customer journey combining Smart Stores and digital channels through its self-care solutions such as "My Orange" or e-commerce solutions.
The improvement of the customer experience
New customer relations management tools allow services to be better targeted based on customer uses. The purpose of these tools is to reconstruct the history of a customer’s relationship with Orange, regardless of their contact points, in order to better know the customer and propose customized solutions that correspond to his or her needs and expectations. According to Les Echos’ e-CAC 40 study published in October 2018, Orange is ranked 5th in digital maturity among large French companies.
Orange is increasingly using its renowned expertise in artificial intelligence. After integrating an artificial intelligence solution (IBM’s Watson) in its Mobile Banking offering, the Group announced that its Djingo smart speaker will be available in Orange stores in the spring of 2019. It will become the main interface for all Orange services. For more information, see Section 1.6.1 Research and Innovation.
A trusted operator
As part of its offers, Orange already secures its customers’ identities (Mobile Connect), health data (Orange Healthcare) and, for some people, their money (Orange Bank, Orange Money). In addition to its existing cyber-security and digital identity services, Orange intends to become a trusted operator which secures and facilitates the digital lives of its customers.
Unlike several Internet giants who highlight free access to their service, the Orange business model is not based on using the personal data of its customers but rather on a subscription (see Section 1.2.3 Business model). At the Show Hello event, Orange announced the creation of an Ethics Committee on data use with customer and employee representatives.
Orange deployed a broad-based project across the Group to prepare for the entry into force of the General Data Protection Regulation (GDPR), which took place in May 2018.
3. Building a company model that is both digital and caring
Orange wants to be a company to which all its employees, women and men, are proud to belong. In order to measure employee satisfaction, which is a guarantee of business performance, Orange introduced an employee satisfaction plan with a bi-annual survey in France and an annual survey outside of France.
The Group is continuing its internal transformation driven by the three priorities of its promise to be a people-oriented and digital employer:
-relying on committed employees;
-developing collective agility by encouraging initiative and being always more customer-focused;
-and securing the skills needed for the future by developing expertise in-house and attracting new talent. The strong and rapid change in business lines and skills is becoming a major societal challenge.
In December 2018, Orange confirmed its policy of being an ambitious employer by signing a new inter-generational agreement for the 2019-2021 period based on three major themes: integrating young, measures for senior employees and end-of-career management, and the transmission of know-how, particularly between generations.
Orange has been committed to achieving gender equality in the workplace for over ten years. It has focused on four main areas: women’s access to positions of responsibility and to every management level, balanced gender representation in all business areas including technical fields, equal pay, and private life/work life balance.
Orange is involved in the environmental and energy transition. In July 2018, it signed a new incentive agreement which, in particular, introduced a Corporate Social Responsibility indicator for energy management.
In order to develop the skills needed for the future, Orange Cyberdefense joined forces with Microsoft and ECE Paris to train future cyber-security experts at the heart of the digital transformation of companies.
A recognized policy of human resources development
In February 2019, for the fourth consecutive year, Orange received the Top Employer Global 2019 world certification, which rewards the best human resource policies and practices. Orange is one of the 14 employers in the world to be certified Top Employers Global 2019 and the only telecoms operator on the list.
On October 4, 2018, Orange also received the Top Employer Africa 2019 certification for the sixth consecutive year, placing it among the three first Top Employers on the continent.
4. Supporting the transformation of business customers
Carrying opportunity, efficiency, and growth, the digital revolution deeply transforms the activities, organization, tools (customer and employee relations) and the processes of businesses. In this context, Orange is positioned as a trusted partner to support companies in their digital transformation. To this end, the Group is attentive to the needs and specifics of each of its customers’ industries, business lines and processes, and security constraints, from SMEs to multinationals. In addition to its traditional role as a supplier of connectivity wherever it is present, the Group focuses on four key areas:
-providing digital work solutions to allow employees to become more mobile, more connected and more collaborative;
-improving business line processes, particularly through applications and connected objects, which provide companies with new possibilities;
-providing multinationals with private and hybrid Cloud solutions;
-security solutions for the protection of all areas of companies’ vital activities, which represent an increasingly important challenge today.
In 2018, Orange Business Services pursued its strategy of becoming a global player in digital transformation and accelerated its growth in services. In addition, the diversification of its B2B activities continues with the structurally important acquisitions of Enovacom (a leading player in e-health), Business & Decision (an international consulting and systems integration group) and Basefarm Holding (a major player in infrastructure and management services of Cloud critical applications in Europe).
For more information, see Section 1.4.5. Enterprise.
5. Diversifying by capitalizing on its assets
Orange concentrates on fields in which it can capitalize on its assets and be a legitimate player in its customers’ eyes to develop new areas of growth: following on connected devices and mobile financial services, cyber defense has become a major challenge for companies and governments.
Connected objects and mobile financial services have fundamentally transformed customers’ daily life, and Orange believes it can provide a real value-added service in these areas. These services require enhanced connectivity and offer numerous synergies with the Group’s main assets: customer relationships, digital expertise, both physical and digital distribution power, capacity for innovation, brand strength (building confidence and trust with clients), networks and international presence.
Cyber-defense is another field in which the Group has all of the assets needed to offer the solutions of the future to its customers. The Group opened Orange Cyberdefense in Casablanca, Morocco in October 2018 to create the cyber-security leader in French-speaking Africa.
A new Group Executive Committee took office on May 2, 2018. The fifteen-member team, both diversified and more international, is tasked with ensuring the successful transformation of Orange into a multi-services operator by capitalizing on the progress achieved through the Essentials2020 plan, and notably through its voluntary involvement in the deployment of very high-speed broadband networks and improvement of the customer experience.
Connected objects
The Group wants to be present across the entire value chain of connected devices: the distribution of connected devices, the supply of related value-added services, and the management of data from the connected devices, in particular using Datavenue, its open intermediation platform.
Orange Business Services launched the LTE-M technology in November 2018, dedicated to IoT in France. It also initiated a developer challenge to stimulate the LTE-M ecosystem. LTE-M technology is already available in Belgium, was launched in Romania at the end of 2018 and will be released in Spain in 2019.
Mobile financial services
The growth prospects for mobile financial services are significant, not only in Europe but also in Africa, where the mobile penetration rate is much higher than the percentage of people with bank accounts in most concerned countries, and where customers want to make an increasing number of payments using mobile devices, in a simple and fluid manner thanks to the dissemination of smartphones.
Orange’s ambition in mobile financial services is to achieve the following by 2023:
-4 million Orange Bank customers and €500 million in net banking income in Europe;
-over €800 million in revenue and over 30 million active Orange Money customers in Africa and the Middle East.
For more information, see Section 1.3 Significant events.
A digital, efficient and responsible company
The Group wants to meet its objectives in respect of CSR performance by being an ethical company, respectful of the ecosystem and the environment in which it operates.
Corporate responsibility
In order to respond to the social and environmental challenges related to the increasing number of devices (smartphones, tablets, connected objects), as well as to the multiplication of energy-consuming uses, Orange has committed to two priorities: to reduce its CO2 emissions per customer use by 50% by 2020 (compared to 2006), and to promote the integration of circular economy principles within its organization and its processes. At the end of 2018, CO2 emissions per customer use had been reduced by 56.6% since 2006. In March 2018, Orange extended its solar energy access services to the residents of rural areas in five new countries, confirming its intent to become a key player in the energy transition in Africa.
For more information, see chapter 4 Non-financial performance.
For the 2018 Shareholders’ Meeting, Orange published its third Integrated Annual Report showing shareholders and all its audiences how its corporate project intends to create sustainable value shared by all.
Operational effectiveness
Orange continues to improve its operational effectiveness through the implementation of its Explore2020 program. Orange has achieved gross savings of €3.5 billion since 2015, thus exceeding the €3 billion of gross savings initially forecast for the 2015-2018 period.
Over the 2019-2020 period, Orange will continue its efforts using as main drivers digitization, simplification and sharing to achieve additional gross savings of one billion euros over this period.
Since 2018, the Group has also leveraged a Lean CAPEX program for the gradual reduction of unit costs, which will result in savings of up to one billion euros by the end of 2020. This will be partly reinvested, in accordance with the Group’s objectives.
Ambitions
Orange’s strategy, in its core and new business areas, aims to generate new growth while maintaining a healthy financial position. Concerning operations, the Group tracks several major indicators allowing it to assess the implementation of the Essentials2020 plan presented in March 2015:
Two global summary indicators reflect the core ambition of Essentials2020 concerning Orange customers’ digital experience:
-a leadership indicator in terms of customer recommendations (the Net Promoter Score or NPS), which encompasses all of the strategic plan’s drivers. Orange had set itself the goal of becoming number 1 in NPS among 75% of customers before 2018. It achieved very positive results in 2017, with 68% ranking it number 1. In 2018 however, this score fell to 57% due to strong competitive pressure on prices in several countries. The global target of 75% was therefore not met. However, the Group does hold the top position in 15 out of 23 countries (3), with a notably high score in France, where Orange is number 1 in all segments (4);
-an indicator which measures the power of the Orange brand: the Brand Power Index. Orange’s goal was to ensure ongoing improvement of this indicator in all of its markets by 2018. In 2018, compared with 2014, the Brand Power Index for fixed broadband and convergence increased in 7 countries out of 10 and the Brand Power Index for mobile increased in 15 countries out of 25.
Furthermore, Orange has one goal per driver:
-for the first driver on enhanced connectivity, Orange set itself the objective of tripling the average data speeds of its customers on its fixed and mobile networks by the end of 2018 compared with 2014. At the end of 2018, compared with 2014, the average data speed of the fixed network increased 7.6 times thanks to the deployment of fiber and the average data speed of the mobile network increased 3.1 times;
-for the second driver, on customer relationships, Orange was aiming for 50% digitization of interactions with its customers in Europe by 2018. In 2018, 52% of Orange’s customer interactions were via digital channels;
-for the third driver on the digital and caring employer model, Orange has chosen an indicator symmetrical to that chosen for its customers, based on recommendation. In 2018, 81% of employees recommended Orange as employer;
-for the fourth driver on the Enterprise market, Orange has chosen to measure the success of the transformation of its Enterprise business model towards IT services. The Group aims to raise the share of IT and integration services in the Orange Business Services revenue mix by 10 points by 2020. In 2018, revenue from IT and integration services accounted for 36% of OBS revenue on a like-for-like basis, i.e., an 8-point increase compared with 2014;
-finally, the selected indicator for the last driver measures the success of diversification into new services, notably connected devices and mobile financial services. The objective was for these new services to contribute more than one billion euros to the Group’s revenue in 2018. With 2018 revenue of €862 million, this objective was not achieved given that the connected devices market grew less than expected.
Financial objectives
As regards the financial component, see Sections 3.2.2 Outlook, and 6.3 Dividend distribution policy.
1.3. Significant events
In 2018, the Group continued to carry out its strategic plan, Essentials2020, which relies primarily on the quality of the Group’s networks resulting from targeted capital investments, the depth of its convergent and content products and the diversification into new services, particularly mobile financial services and connected devices. In the business segment, Orange Business Services made several acquisitions in 2018 to supplement its business customer digital transformation activities. The Group also continues to implement its operational efficiency and cost-control programs (with Explore2020) and investment programs (with Lean CAPEX).
In March 2018, Stéphane Richard, Chairman and Chief Executive Officer of Orange, announced a renewed Group Executive Committee, with a new, more diversified and international team of 15 members whose mission is to lead the transformation of Orange into a multi-services operator by capitalizing on the progress achieved through Essentials2020. The new Executive Committee started work on May 2, 2018 (see Section 5.1 Composition of management and supervisory bodies).
Investment in networks
In 2018, the investments in networks (besides telecommunication licenses) accounted for 62% of the Group’s CAPEX. In particular, the installation of networks providing broadband and very high-speed broadband Internet access is one of the five levers of the Essentials2020 strategic plan. In France, Orange invested 9 billion euros in the installation of networks between 2015 and 2018, 3 billion euros of which was on fiber optics.
Very high-speed fixed broadband networks
The Group is continuing the accelerated deployment of its very high-speed fixed broadband networks with 5.9 million new households connectable year-on-year. At December 31, 2018, Orange had 32.5 million very high-speed broadband connectable households throughout the world (up 22.4% year-on-year), including 13.8 million in Spain, 11.8 million in France and 6.4 million in the rest of Europe. In France, out of 11.8 million households and commercial premises in the available market for fiber at the end of 2018, Orange built 9.3 million fiber connections, using only equity capital. Orange has installed 69% of the fiber optic network in France (source: Arcep) and in 2018 signed six new agreements for operating the fiber optic networks of regional authorities (Bourgogne-Franche-Comté, Gironde, Vienne-Deux Sèvres, Orne and Var, plus a submarine cable in Guadeloupe, see below). Orange particularly made progress with installations in the less populated areas, with an increase of 40% in 2018 compared with 2017. In addition, in May 2018, Orange entered into commitments with the French government regarding the deployment of fiber optics in its «AMII» areas (areas covered by calls for expressions of investment intentions) (see Note 14.1 to the consolidated annual financial statements).
In April 2018, Orange also announced a commercial agreement with Eutelsat aiming to improve its satellite-based, very high-speed broadband Internet access services in the European countries where it operates in the retail market. This agreement will allow the Group to offer high quality access to digital services to all of its European customers, including in rural areas where it is sometimes difficult to introduce traditional very high-speed broadband networks.
Modernization of the fixed-line telephony network in France
In France, Orange has been gradually replacing the Public Switched Telephone Network (PSTN) technology installed in the 1970s in order to preserve fixed-line telephony service for years to come. IP (Internet Protocol) based technology, now an international communications standard, is already used by nearly 11 million Orange customers in France. It will gradually replace the old STN technology at Orange for all of its fixed-line telephony customers. Since November 15, 2018, Orange has only been marketing fixed-line telephony in metropolitan France using IP.
Very high-speed broadband mobile networks (4G/4G+/5G)
In 2018, Orange continued installing its 4G/4G+ networks. In France and in Spain, the investments made are mainly aimed at increasing the density of coverage outside of urban areas and at improving speeds in the major cities. At December 31, 2018, 4G coverage rates reached 98.6% of the population in France, 96.9% in Spain and 99.8% in Poland. In France, Orange will have converted nearly all of its 3G sites into 4G by the end of 2019. In addition, Orange’s 4G+ is already installed in dozens of cities to meet the growing usage needs of customers. In Africa and the Middle East, deployments are continuing, particularly in Mali, Morocco and Senegal. With these investments, Orange has 56.2 million 4G customers across the world at December 31, 2018 (an increase of 21.7% year-on-year), including 15 million in France, 9.8 million in Spain, 14.8 million in Europe and 16.7 million in Africa & Middle East (excluding associates and joint ventures).
In addition, against a background of strong growth in mobile Internet traffic, the Group is actively preparing for the arrival of 5G technology and has, in particular, decided to carry out new large-scale trials in Europe, as a joint development with its technology and innovation partners. 5G promises a higher-performance network, with speeds up to 10 times faster than 4G and an altogether new network for the Internet of Things, able to connect objects on a massive scale. In countries where there is very little fiber optic infrastructure, 5G will also be an alternative for accessing very high-speed. In 2018, Orange conducted the first conclusive technical experiments of 5G in France and in Europe. Rolled out at the existing 4G sites, 5G will be installed in 17 cities in Europe in 2019 and be ready for commercialization starting in 2020, when a sufficient number of 5G smartphones will be available.
Orange ranked no. 1 mobile network in France
For the eighth consecutive time, Orange confirmed its ranking as the number one mobile network in France according to the results of the annual survey of the quality of service of mobile operators in mainland France published by Arcep (Autorité de Régulation des Communications Electroniques et des Postes) in October 2018. Overall, Orange was first or tied for first on 181 of the 193 criteria measured.
This survey also bears out the Group’s continued efforts on mobile coverage for rural areas in France, by this year again ranking Orange in first place or tied for first place for voice services in communities with less than 10,000 residents. In January 2018, Orange and the other French mobile operators signed an agreement (called the «New Deal») with the French government, under the aegis of Arcep, on access by the French population to broadband in the whole country. The extension until 2031 of authorizations to use the 900 MHz, 1,800 MHz and 2,100 MHz frequencies expiring in 2021 will take place
without an increase in fees or financial auctions, in exchange for increased coverage obligations for operators from 2018. In this connection, Orange has agreed along with the other French mobile operators to cover at least 5,000 new areas throughout the nation.
Submarine cables
Through new partnerships, Orange has strengthened its position in the submarine cable market. The Group’s goal is to raise the quality of the services it offers on its global network, while optimizing costs, so as to handle the ever increasing volume of data exchanges.
In May 2018, Orange International Carriers announced the entry into service of a new land cable between Marseilles and Penmarch (two major geographic locations for submarine cables), which interconnects 15 submarine cables and thus improves connectivity between Asia, the Middle East and West Africa. In September 2018, Orange announced the improvement of its connectivity on the coast of West Africa due to its investment in the MainOne submarine cable. In October 2018, Orange also announced a partnership with Google as part of the Dunant Project, the first submarine cable to connect the United States and France in over 15 years. The 6,600 kilometer cable is set to go into service in late 2020. In addition, Orange and PCCW Global announced in October 2018 their partnership agreement to lay the new PEACE submarine cable (Pakistan & East Africa Connecting Europe). This cable, 12,000 kilometers long, is to connect Pakistan, Djibouti, Kenya, Egypt and France and should be operational in 2020. Finally, in January 2019, Orange inaugurated the Kanawa cable that connects French Guiana, Martinique and Guadeloupe. This cable, 1,750 kilometers long, was financed by Orange’s equity capital.
The multi-services and enhanced services strategy
Content, mobile financial services and connected devices are major areas of diversification for the Group, one of the five levers of its Essentials2020 strategic plan and a component of the broader strategy of developing enhanced services.
Mobile financial services (Orange Bank - Orange Money)
At the end of November 2018, Orange made known its goal of expanding in mobile financial services.
In terms of Europe, the Group’s goal is to roll out its mobile financial services in seven European countries by 2023 through its Orange Bank services (in France, Spain, Poland, Belgium and Slovakia) and enhanced services through its Orange Money service (in Romania and Moldova). The Group aims to have 4 million customers by that date. Orange Bank was launched in November 2017 in metropolitan France and had served 248,000 customers as of December 31, 2018. In March 2018, Orange Bank enhanced its line of banking products with a personal loans offering. In October 2018, its banking products were launched in the French overseas departments.
With respect to Africa and the Middle East, the Group’s goal is to extend Orange Money into 19 countries and aims to have more than 30 million active customers in 2023. Launched in 2008, Orange Money today has 39 million customers, including 15 million who use the service every month, in 15 countries in Africa and the Middle East (excluding associates and joint ventures). Another of the Group’s goals is to launch, with partners, additional banking services (credit, saving and insurance products) in four African nations (Côte d’Ivoire, Senegal, Mali and Burkina Faso) through the launch of Orange Bank Africa, assuming the necessary authorizations can be obtained. Moreover, Orange and MTN, two of the largest mobile money operators on the African continent, announced in November 2018 the creation of Mowali, a joint operation that will enable interoperable mobile payments throughout the continent.
Content
Orange’s content strategy will give priority to the broadest possible distribution of the best content offerings on the market, and to invest in movies and series via Orange Studio and OCS. It has been confirmed through a series of new agreements signed in 2018:
-in January and March 2018 respectively, Orange renewed distribution agreements with the M6 Group and TF1 Group channels as well as non-linear services associated with these channels. These agreements allow Orange TV customers to enjoy enhanced services and features for the two groups’ programming. At December 31, 2018, Orange had 9.6 million IPTV and satellite TV customers (of which 7.0 million customers in France), a 6.1% increase year-on-year;
-in 2018, Orange extended its agreement with organizations in the film industry to invest in French and European movie productions via OCS, committing 125 million euros over the next three years (2019-2021);
-in April 2018, Orange and Fnac Darty announced the strengthening of their digital reading strategic partnership with the launch of a new audiobook offering, promoting the dissemination of new methods of digital reading. Following on from the «ePresse» (digital press) and «izneo by Fnac» (digital comics) services launched at the beginning of October 2017, since May 2018 Orange customers have been able to access 100,000 audiobooks and 3 million e-books, through the «Kobo by Fnac» audiobook service;
-in April 2018, Orange and Vivendi announced that they had signed a partnership with the CanalOlympia movie theater network, the leading movie theater and show network managed by Vivendi in Central and West Africa, with several dozen theaters planned in the coming years.
Internet of Things (IoT)
To support the explosion of the Internet of Things (IoT) market, Orange Business Services announced in November 2018 the introduction of LTE-M technology (Long-Term Evolution for Machines) in France. This is the first technology dedicated to connected devices on a mobile network in France. Installed on the Orange 4G network, this technology facilitates exchanges of enriched data (Data, Voice, Messaging) with devices that are in motion, in buildings or underground locations, and also is needed for logistical tracking, telesurveillance and medical remote assistance, and vehicle fleet management. At year-end 2018, over 98% of the population was covered. Starting in 2019, international roaming and other new features specific to LTE-M technology will be available.
This end-to-end technology supplements the existing IoT dedicated network products such as LoRa®, which remains the network of choice for connecting devices with very low energy consumption. The LoRa® (Long Range) network now covers over 30,000 towns and cities and 95% of the population of metropolitan France.
In April 2018, Orange Business Services also announced the launch, in France and in Europe, of the Datavenue Market web portal, putting the suppliers of connected devices in contact with companies or developers wishing to test and validate an IoT project, in a completely independent manner and at lower cost.
Lastly, Orange and Groupama announced in January 2019 their agreement to create a joint company called Protectline, operating in the property telesurveillance space. This company will be 51% owned by Orange and 49% by Groupama. Orange will introduce its property telesurveillance products for fixed and mobile retail customers in France in the spring of 2019.
Digital transformation of business customers
As part of the Essentials2020 strategic plan, Orange is positioning itself as a partner of companies in their digital transformation. To that end, Orange has added to its activities through acquisitions and creating a joint company.
Following the takeover in June 2018 and additional acquisitions in second half of 2018, Orange acquired 88.2% of the capital of Business & Decision, a company specializing in data and digital technology, operating in business intelligence (structured analysis of business data) and customer relationship management (CRM), for a total amount of 36 million euros, net of the cash acquired. In addition, Orange benefits from mutually-binding options on the remaining 4.9% of the capital (see Note 3.2 to the consolidated annual financial statements).
In August 2018, Orange also acquired 100% of Baseform Holding, a European company active in infrastructure, Cloud services, the management of critical applications and data analysis, for a total of 230 million euros net of the cash acquired (see Note 3.2 to the consolidated annual financial statements). Henceforth, with 2,200 employees expert in the Cloud, more than half of whom work outside France, Orange Business Services plans to generate over half of its revenue in the Cloud internationally and is aiming at annual growth of 25% through 2022.
In February 2018, Orange also acquired Enovacom, which operates in the e-health sector. This acquisition forms part of the strategy of Orange Healthcare, its healthcare subsidiary, to be the leading partner in the digital transformation of health organizations and stakeholders in France and internationally.
Lastly, in February 2019, Orange announced the acquisition of the SecureData group and its subsidiary SensePost. SecureData is the largest independent provider of cyber security services in the United Kingdom, which is the largest market in Europe (see Note 17 to the consolidated annual financial statements).
Orange, a people-oriented and digital employer
Building a people-oriented and digital employer model by securing the skills needed for tomorrow, developing collective agility, and fostering individual commitment is one of the priorities of the Essentials2020 strategic plan.
In December 2018, Orange signed a new intergenerational agreement with three French trade unions, covering the integration of young people, assistance with and preparation for retirement and knowledge transfer. This agreement, effective January 1, 2019, covers the years 2019, 2020 and 2021. Under this agreement, Orange has agreed that the Group in France will host an average of 4,000 young people on work-study and 2,400 interns at all times. Once they are trained, the Group further agrees to hire at least 2,000 from work-study or internships on permanent contracts. Lastly, Orange has given a three-year extension to the French «Part-Time for Seniors» plan of 2015, allowing employees to tailor their schedules during the three years preceding their retirement. The estimated number of beneficiaries of the extension of this plan is 6,000 employees (see Note 6 to the consolidated annual financial statements).
In June and December 2018, Orange announced that it had, in the context of its share Buyback program, acquired 6.9 million treasury shares for the amount of 101 million euros (see Note 13.2 to the consolidated annual financial statements). Those purchases were made in order to fulfill obligations related to (i) the «Orange Vision 2020» free share award plan covering 9.1 million shares and (ii) the plan for performance share awards as part of executives’ multi-year variable compensation (Long Term Incentive Plan, LTIP 2018 - 2020). These plans were established with the objective of involving all Group employees and executives (subject to continued employment and performance conditions) in the success of the Essentials2020 strategic plan (see Note 6.3 to the consolidated annual financial statements).
Furthermore, in December 2018, Orange announced the payment of an extraordinary «solidarity bonus» for 20,000 of the lowest-income employees as a commitment to the issue of people’s purchasing power.
Operational effectiveness (Explore2020)
In 2018, Orange continued its operational effectiveness (Explore2020) program. The objective, which was reviewed in December 2017, was to exceed the 3 billion euros of gross savings initially projected for 2015-2018, thereby contributing to controlling the expected increase in operating expenses.
On an aggregate basis for fiscal years 2015 to 2018, the objective was reached, with 3.5 billion euros of gross savings over the period (953 million euros in 2015, 758 million euros in 2016, 934 million euros in 2017 and 893 million euros in 2018), thus surpassing the original goal by 18%. In 2018, this amount related to both operating expenses included in the adjusted EBITDA calculation, of 681 million euros, and in CAPEX, of 211 million euros.
Over the 2019-2020 period, Orange will continue its efforts on costs using as the main drivers digitization, simplification and sharing to achieve additional gross savings of one billion euros over the period 2019-2020. On investments, Orange will rely on Lean CAPEX, a program with the goal of gradually reducing unit costs by 15%, resulting in one billion euros in gross savings in 2020 (which will be partially reinvested in line with the Group’s objectives).
1.4. Operating activities
Orange provides consumers, businesses and other telecommunications operators with a wide range of services including fixed telephony and mobile telecommunications, data transmission and other value-added services, including mobile financial services. The Group operates in 27 countries (including two in which it holds a minority interest). The Group’s business is presented in this section under the following segments: France, Spain, Europe, Africa & Middle East, Enterprise, International Carriers & Shared Services, Orange Bank (see Section 3.3.1 Note 1 Segment information).
The results of Orange’s activities in 2018 and its principal operating indicators in its various business segments are detailed in Section 3.1 Analysis of the Group’s financial position and earnings.
Unless otherwise indicated, the market shares indicated in this chapter correspond to market shares in terms of volume, and the data related to customers does not include SIM cards dedicated to connected objects (Machine to Machine).
1.4.1. France
Orange is France’s incumbent telecommunications operator (see Section 1.1 Overview). The bulk of its business is carried by Orange SA, which is also the parent company of the Orange group.
The France operating segment includes all fixed and mobile communication services to consumers and companies with less than 50 employees (5) in France (6), as well as services for carriers. Activities developed for companies with more than 50 employees, as well as content activities and those of Orange Bank are covered respectively in Sections 1.4.5, 1.4.6.2 and 1.4.7 of this document.
In 2018, the France operating segment generated 42.6% of the Group’s consolidated revenue.
The market
At September 30, 2018, the revenue of French telecommunications operators declined by 1.1% on a sliding 12-month basis (source: Arcep, 3rd quarter 2018). While fixed narrowband telephony revenue continued its downward trend as a result of the steady decline in the number of lines, fixed broadband revenue continued its growth due to the increasing number of accesses. Despite intense competition, mobile services revenue rose driven by a sustained growth in access numbers.
The French broadband and very high-speed broadband Internet market is dominated by four main operators that account for over 99% of broadband customers. With a 40.3% market share, down 0.1 point compared with end-2017, Orange is the market leader on this market ahead of Free, Altice-SFR and Bouygues Telecom (nos. 2, 3 and 4, respectively, in number of customers). (7)
The French mobile market is dominated by the same four operators as the fixed market, which account for 89% of mobile customers (excluding M2M). With a market share of 32.5% in 2018 compared with 32.9% in 2017, Orange also remains the leader in this market ahead of its competitors Altice-SFR, Free Mobile and Bouygues Telecom (respectively nos. 2, 3 and 4 in number of mobile customers excluding M2M) and all of the MVNOs. (7)
Orange’s business activities
Orange France’s core business involves the provision of fixed-line, broadband and very high-speed broadband Internet and mobile telephony services for the Retail and Pro-SME markets. This strategy is underpinned by convergence, very high-speed fixed and mobile broadband and the Group’s "unmatched" customer experience (see Section 1.2.2 The Orange group strategy).
In the Retail mobile market, Orange has segmented its offers into four main categories: 2h 100 MB or 2h 5 GB for customers looking for basic communication and Internet connectivity; 10 GB which offers a combination of enhanced Internet connectivity and increased communication possibilities; 50 GB adapted to meet the needs of heavier Internet users; and 100 GB and 150 GB for customers wanting the best smartphones and who have extremely intense connectivity needs both in France and abroad.
Orange is present in all market segments, including the entry-level market, with four types of mobile contract marketed under the Sosh brand at affordable prices that are available only on the Internet, with no commitment and no handset. At the end of December 2018, Sosh had 3.8 million mobile clients.
Since 2015, Orange has only marketed 4G offers, including entry-level packages.
Orange pressed ahead with its family-based strategy through its flagship Open offer with the development of multi-line contracts. Open mobile offers are available in the same ranges as traditional mobile offers and include the same levels of service.
The strategy of segmenting offers on the Retail and Pro-SME markets allows Orange to continue to grow its subscriber base while the decline in prepaid offers continues.
At the same time, the MVNO customer base hosted on Orange’s network has remained stable on a sliding 12-month basis.
In the Retail broadband Internet market, Orange has segmented its offers into two main categories: Livebox designed for customers looking for basic Internet and TV services, and Livebox Up which meets the needs of customers who want the highest speeds and a premium TV experience. Regarding equipment, in October 2018 Orange launched a new HDTV decoder.
Sosh has also been present on the broadband Internet market since the end of August 2018, with affordable offers, available exclusively online and without commitment.
Orange’s and Sosh’s broadband Internet access offers are marketed with FTTH technology in eligible areas, or alternatively, with ADSL. Orange is the leader in terms of FTTH access sold, with a portfolio of nearly 2.6 million subscribers at the end of 2018.
Since the telecommunications market was opened to competition, Orange has been the operator responsible for part of the universal provision of services. These include a minimal set of basic services available to all citizens who request them, including connection to a fixed network open to the public, and the provision of quality telephone service at an affordable rate. See section 1.7.1.2.3 Regulation of fixed-line telephony, broadband and very high-speed broadband Internet.
Furthermore, Orange offers services to carriers, an activity which includes the interconnection of competing operators, as well as unbundling and wholesale services (ADSL and fiber optic), regulated by Arcep, and construction and marketing services for very high-speed fiber optic networks. Unbundling services saw a decrease in their price regulated by Arcep on January 1, 2018.
With the steady growth in full unbundling, as well as the wholesale of ADSL contracts and naked ADSL access to third-party Internet service providers, the decline in revenue generated by the traditional telephony service business continues.
Orange is also pursuing advertising activities via its websites, which are available in multi-screen web, mobile and tablet format with more than 27 million unique visitors per month. The most frequently visited French website on a daily basis, Orange.fr ranks 6th behind Google, Facebook, YouTube, Amazon and Wikipedia, with 8.8 million unique visitors per day. On mobile screens, Orange attracts 16.8 million mobile users as well as 4.1 million tablet users each month (source: Médiamétrie and Médiamétrie//NetRatings - Audience Internet Global - November 2018).
Against a backdrop of fierce competition and market restructuring, Orange has also continued to innovate, notably with the continuous development of mobile financial services (see Section 1.4.7 Orange Bank).
Distribution
Orange is pressing ahead with its digital development strategy with a 100% digital customer experience in Orange online stores (available on Orange.fr) and Sosh (via Sosh.fr), with Sosh offers available only on the digital channel. In 2018, the latter accounted for 26.4% of sales actions, up 5.5 points year-on-year. Digital technologies can address the growing needs of customers for autonomy and immediacy. Orange’s contract management app My Orange, attracted 5.0 million unique visitors in December 2018.
The dedicated customer centers, based on the type of services marketed, accounted for 19.2% of sales actions, a decline of 1.4 point year-on-year. The development of the digital channel is thus continuing to relieve the pressure on call centers and reduces the use of outsourcing.
The network of retail stores spread across France continues to roll out the Smart Store concept launched in 2015. At end-2018, this network, which consisted of 394 stores owned by Orange (including 16 Megastores and 180 Smart Stores), and 201 Générale de Téléphone Stores (including 78 Smart Stores), accounted for 50.4% of sales actions, down 2.7 points year-on-year.
Lastly, the other channels, which include direct marketing, door-to-door and the multi-operator network, accounted for 4% of sales actions, a decline of 1.3 point year-on-year.
The Network
Orange’s commercial leadership is partly based on its leadership in fixed and mobile networks.
In the fixed network, Orange continued to step up its very high-speed broadband program in 2018 with the installation of 2.7 million FTTH connections in one year (compared with 2.2 million in 2017), setting a new record in France. 69% of fiber optic installations were deployed by Orange in 2018 (source: Arcep, 3rd quarter 2018). At end-2018, Orange had 11.8 million FTTH-connections.
Actions to improve the fixed network speed with a view to significantly improving the Internet experience of households and professional customers in rural areas continued, with fiber deployment in town centers (subscriber connection node opticalization, fiber to sub-distribution frames), and participation in FTTH Public Initiative Networks (PIN) of local and regional authorities. Orange has enjoyed considerable success regarding its expertise in PIN deployment. Six new agreements relating to the operation of the fiber optic networks of local authorities (Bourgogne - Franche-Comté, Gironde, Vienne - Deux-Sèvres, Orne and Var, as well as a submarine cable in Guadeloupe) were signed in 2018.
As regards the mobile network, 2018 saw the continued deployment of 4G reaching a coverage rate of 98.6% of the French population (up 2,7 points compared with end-2017), which is still the best 4G coverage rate in France (8). At the end of 2018, Orange had deployed 19,053 4G sites in France (9) (source: ANFr, January 1, 2019).
This deployment involves the continued extension of coverage in tourist areas, stadiums, trains (LGV and TER), subways and the motorway network.
For the eighth consecutive year, the Orange mobile network was ranked no. 1 by Arcep in 2018 (source: Arcep, October 2018).
As regards the cluster, transmission, and transport network, Orange carried on with (i) the simplification of fixed-line broadband access engineering (vDSL and FTTH) to accommodate the high growth in traffic, and (ii) works aimed at the transition from traditional telephony services to IP telephony.
1.4.2. Spain
The Group has been present in Spain since the liberalization of the Telecom market in 1998. Initially present in the fixed-line telephony market, it acquired the mobile telephony operator Amena in 2005, and then adopted the Orange brand in 2006. The acquisition of the Jazztel fixed-line operator in 2015 enabled Orange to consolidate its position in terms of convergence thanks to Jazztel’s fiber coverage. The Group has also strengthened its presence in the low-cost market with the acquisitions of MVNO Simyo in 2012 and República Móvil in 2018, thereby consolidating its multi-brand strategy designed to cover all segments of the market.
In 2018, Orange generated 12.8% of its consolidated revenue in Spain, making it the second most important market for the Group.
The market
Since the beginning of market consolidation in 2014, four operators have dominated the telecoms market: Telefónica, the incumbent operator, which operates under the Movistar brand and which acquired D+ in 2014; Orange; Vodafone which acquired ONO in 2014; and MásMóvil Ibercom, initially an MVNO, which acquired Yoigo in 2016 and then signed a commercial agreement to access Orange’s fixed and mobile networks.
Together, the four convergent operators control more than 90% of the market, with Telefónica ranked first, followed by Orange, whose market share in 2018 reached 26.7% on broadband Internet and 25.8% on mobile, then Vodafone (8).
In addition to competing on the B2B and B2C segments through their main brands, these four operators also compete via other brands in the low-cost market: Orange with Jazztel, Amena, Simyo and República Móvil; Telefónica with Tuenti and O2; Vodafone with Lowi; and MásMóvil with Pepephone.
Orange’s activities in Spain
Orange is pursuing a multi-brand commercial strategy in Spain comprising a focus on convergent offers, the deployment of next-generation networks and prioritizing innovation in its services and business lines (X by Orange, wholesale, etc.). Its operating strategy combines the potential of its 4G and FTTH networks. In 2018, this strategy continued to be supported by the increased number of TV customers and the growing trend for convergence in the customer base.
In the mobile market, Orange has developed a wide range of 4G offers, both for convergent customers and for mobile-only customers. Orange’s strategy focuses on providing value-for-money, very high-quality services, including for low-cost offers, to meet the needs of all customer segments. In 2018, Orange improved its offerings to meet the growing demands of its customers for data and services.
Orange also offers quality, high definition and multi-device TV contents. In 2018, Orange significantly developed its TV platform, both at the technical level and in terms of content, by enhancing its offer through broadcasting soccer matches and other premium content, which allowed it to reach a TV penetration rate of more than 17% (10). Since August 2018, Orange has, with Movistar, been the only operator to offer its customers the entire soccer content available in Spain.
Orange is also a key player in the low-cost market with mobile-only and convergent offers available online under the brands Amena, Simyo and República Móvil.
On the fixed broadband market, Orange continued to be the leader in FTTH customer base growth.
On the B2B market, Orange launched X by Orange in 2018 to enable small offices and home offices (Sohos) and Small and Medium Enterprises (SMEs) to have access to high-end digital services. As a digital partner for large companies, Orange has developed cutting-edge technologies such as Big Data, the Internet of Things and cyber security services, enabling its key account clients to improve their operational efficiency and competitive position.
With the objective of differentiating itself from other operators, Orange launched several innovative solutions in 2018 such as Smart WiFi, which ensures an optimal wireless signal at home for its customers, and WiFi with me, which allows customers to access the Internet wherever they are. Orange was also the only operator in Spain to offer Google Home Assistant and was granted exclusivity for the launch of the Pixel 3 smartphone.
Orange has also innovated in the equipment market, offering the best smartphones, tablets, video game consoles and Smart TVs in a bundle with offers tailored to meet the needs of each customer.
The Network
Orange continued to deploy its FTTH network, with 1.9 million new connectable households in 2018. In 2018, Orange was able to offer very high-speed broadband connections to 13.8 million households through its own fiber optic network and thanks to the network sharing agreement signed with Vodafone and MásMóvil.
Orange is also pursuing the roll out of its 4G network which, in 2018, covered 96.9% of the population (10). Regarding 5G, Orange has launched a national testing program to develop real 5G usage scenarios and demonstrate the benefits of this technology to improve the customer experience.
1.4.3. Europe
Outside France and Spain, the Group is present in six countries in Europe, where it is implementing its convergence strategy through the deployment of very high-speed fixed and mobile broadband, and the launch of new offers. In 2018, Orange launched its Love convergence offers in all European countries. In each country, Orange develops its convergence strategy taking into account the local context and leveraging the strengths of its subsidiaries:
-in Poland where the Group is the incumbent operator, leader in fixed and number two in mobile;
-in Belgium and Luxembourg, where the Group launched its convergence offers via partnerships;
-and in other countries in Central Europe (Romania, Slovakia and Moldova) where the Group, leader in mobile, is a convergent player via the deployment of fiber optic, the use of 4G for the development of fixed via LTE, and its partnerships.
1.4.3.1. Poland
The Group has been present in Poland since 2000, the year it acquired an interest in the incumbent operator, Telekomunikacja Polska (renamed Orange Polska). In 2006, Orange became the single brand for mobile activities in accordance with the Group’s brand policy. In 2012, it also became the single brand for all fixed-line telephony services offered by the Group in Poland. Orange owns 50.67% of the shares of Orange Polska, which is listed on the Warsaw Stock Exchange. In 2018, the Group generated 6.2% of its consolidated revenue in Poland.
Poland has four main mobile telephony operators: Orange, T-Mobile (owned by Deutsche Telekom), Polkomtel (operating under the Plus brand, owned by the Cyfrowy Polsat Pay-TV by satellite group) and P4 (operating under the Play brand, controlled by Tollerton Investments Ltd and Novator Telecom Poland SARL). At the end of 2018, these four mobile telephony operators accounted for 98% of the total number of SIM cards in Poland, with Orange ranking second after Play with a market share of 27.9% at end-December 2018 (10).
In the broadband Internet market, Orange is the leading operator with a market share of 28.4% in the third quarter of 2018 (10). Its principal competitors are cable TV operators (mainly UPC Polska, Vectra and Multimedia Polska), as well as Netia, a traditional telecommunications operator. The telecommunications market is undergoing consolidation with Netia being acquired by the Cyfrowy Polsat group, followed by Vectra’s announcement in August 2018 of its acquisition of Multimedia Polska. While these developments underscore the validity of Orange’s convergent strategy in Poland, they are likely to boost competition.
Orange’s activities in Poland
Orange’s main strategic objective in Poland is to be the leader in convergence, by marketing packaged offers of fixed and mobile broadband access with financial incentives. Convergence enables Orange to differentiate itself from its competitors and gain a larger share of the household media and telecommunications budget and is an effective retention tool. In 2018, Orange pursued this strategy by focusing on its convergent offer, Love, which exceeded one million customers in October 2018. The basic formula of the Love package includes fixed and mobile services at an affordable price. This package can be extended for higher fixed broadband speed, additional SIM cards, additional TV contents and other value-added services.
Orange focuses on a differentiated approach in large cities and medium and small towns, as well as rural areas, by taking into account the local competitive environment, the potential in relation to population density, and customer needs. In large cities, Orange focuses on developing the FTTH coverage and improving its fixed broadband
market share, by leveraging its excellent positioning in the mobile market via the cross-selling of fixed and mobile telephony services. Mobile technologies in rural areas remain the first solution for broadband access.
The number of fixed voice lines continued to decline in 2018, with a net loss of voice customers (traditional PSTN or VoIP) due to structural demographic factors, as well as the growing appeal of mobile telephony services offering unlimited calls across all networks.
As announced in September 2017, Orange Polska continued to implement its new strategic plan Orange.one in 2018. This plan is designed to create long-term value and sets forth the strategic vision of the company by 2020.
In July 2018, Orange and T-Mobile forged a partnership giving access to Orange’s fiber optic network to some T-Mobile customers in non-regulated areas. This 10-year partnership will maximize the use of the Orange fiber optic network and contribute toward a more rapid monetization of this investment.
The Network
In 2018, Orange pursued the deployment of its FTTH network in Poland, extending it to almost 3.4 million connectable households. vDSL coverage stood at 5.3 million households and has not changed significantly since 2017 because of the priority given to the fiber network.
LTE services (4G) are offered by Orange via 10,882 base stations. To meet the strong growth in 4G traffic, Orange focused on spectrum refarming in 2018 to increase the allocation made to 4G, by lowering allocations to 2G and 3G technologies. Orange also focused on increasing the number of sites allowing spectrum aggregation. At end-2018, Orange’s 4G network covered 99.8% of the population (11).
1.4.3.2. Belgium & Luxembourg
In Belgium and Luxembourg, Orange operates via Orange Belgium (previously Mobistar) and its subsidiary Orange Communications Luxembourg. Orange Belgium is listed on the Brussels Stock Exchange. The Orange group holds 52.9% of the capital. Historically present in the mobile segment in Belgium, in 2016 Orange launched convergent offers across the entire country, based on the regulation of wholesale access to cable, and then adopted the Orange brand the same year. In 2018, Orange Belgium generated 3.0% of the Group’s consolidated revenue.
Belgium
The competitive structure of the fixed-line telephony market remained relatively stable in 2018, with the predominance of the incumbent operator Proximus and the regional cable operators Telenet and VOO. Telenet acquired SFR Belux in 2017 and bought the cable network of Etterbeek, a municipality of Brussels, in December 2018.
On the mobile telephony market, Orange’s competitors are two major mobile telephony operators: Proximus (the incumbent operator, 53.5% owned by the Belgian State) and Telenet (56.4% owned by the Liberty Global group), which acquired Base in 2016. With a market share in volume of 27.1% in the third quarter of 2018, Orange ranks third in terms of customer base, but is still second in value terms behind Proximus (11).
In 2018, Orange pursued its convergence strategy, notably by adding to its Love convergent offers a TV function on the Orange TV mobile app, and a fixed phone option. With its Love Internet and TV package, Orange is the first operator in Belgium to market a nationwide cable offer. The success of this high quality fixed offer at an affordable price has enabled it to sharply increase its customer base.
At the same time, Orange Belgium stands out as a "bold challenger" on the mobile market with the launch of the first completely unlimited offer (data, calls and SMS) on the market.
Investment in mobile networks remained high with the steady deployment of 4G, mainly to expand coverage within homes, and to invest in the core transmission network, as well as the steady deployment of 4G+, which provides customers with a more rapid download speed that is up to three times faster. Orange’s 4G network covers 99.7% of the population (11). In addition, Orange Belgium is the first Belgian telecommunications operator to team up with Fluvius, the electricity and gas distribution operator, in a joint fiber optic pilot project, which is in line with the future ultra-fast network objectives of the Flemish Government. Orange was also the first operator to launch end-to-end mobile IoT services.
Luxembourg
Orange started its operations in Luxembourg in 2007 via the acquisition of Voxmobile. The company adopted the Orange brand in 2009.
On the mobile segment, Orange Communications Luxembourg is ranked third behind Post Luxembourg, the market leader and incumbent operator, and Proximus Luxembourg, a subsidiary of the Belgian operator Proximus with its own brand, Tango (source: ILR for the year 2017). Post Luxembourg also has the largest market share in the fixed-line and Internet market.
In 2018, the Luxembourg market remained strongly oriented towards convergence.
In 2018, Orange continued to enjoy the success of its convergent offer, Love, which it completed with the launch of a high-speed fiber optic offer which now goes up to 1 Gbit/s, and its Home Box fixed LTE offer.
1.4.3.3. Central European countries
Romania
Orange Romania was founded in 1997 and adopted the Orange brand in 2002. Historically present on the mobile segment, Orange launched its satellite TV offers in 2013, then its fiber offer in 2016, following a wholesale agreement with Telekom. In 2018, the Group generated 2.7% of its consolidated revenue in Romania.
The Romanian Telecom market is dominated by four operators: Orange, Vodafone, Telekom (the incumbent fixed telephony operator, also present on the mobile segment, jointly owned by the Romanian government and OTE, which is itself jointly controlled by Deutsche Telekom and the Greek government) and RCS&RDS (operating under the Digi brand, owned by Digi Communications).
In the mobile telephony market, Orange’s market share was 34.1% in 2018, compared with 34.8% in 2017. Orange maintained its leading position, followed by Vodafone, Telekom and Digi (11).
Following the recent launch of its fixed offers, Orange’s market share in the fixed-line market increased by 1.8 point, but remains limited at 5.6%, in a market dominated by Digi, followed by the incumbent operator Telekom and UPC (11).
Orange’s activities in Romania
Orange continued to increase its 4G presence, which is the largest in Romania and now covers 96.9% of the population throughout the country as a whole, and 100% in urban areas (11). Orange continued to integrate more data into its offerings, enabling the rapid adoption of smartphones and significant growth in traffic and in revenue from data services. Orange has thus strengthened its leadership position in the 4G segment by maintaining its level of contracts which represent 52% of its customer base. In 2018, Orange improved its Love convergent offers and revamped its post-paid portfolio by focusing on three pillars:
convergence, simplicity and increased data. In September 2018, Orange acquired the rights to the Champions League and Europa League and launched HBO Go for Orange Home TV, in support of convergence.
In 2018, the National Bank of Romania approved the request of Orange Mobile Financial Services for a payment institution license. In July 2018, Orange Mobile Financial Services added new features to its e-wallet offer, in particular the option of having an IBAN account, a first in Romania. At the end of 2018, Orange signed a strategic partnership with VISA to provide Romanians with innovative payment solutions.
Orange is still the leader in terms of innovation thanks to numerous initiatives carried out in 2018, such as the first 5G test in real operating conditions in Cluj, which was carried out as part of Orange Group’s 5G program. The initiatives also included a network coverage map and the launch of the Alex chatbot in June. This chatbot is unique in the Romanian market in that it can give personalized answers to customers’ questions through advanced features that enable it to understand natural language.
Slovakia
Orange Slovensko started operating in 1996 and adopted the Orange brand in 2002. Historically present on the mobile segment, Orange reinforced its position in the area of convergence thanks to a new fiber deployment program in 2016 and the launch of fixed-line solutions via LTE in 2017. In 2018, the Group generated 1.3% of its consolidated revenue in Slovakia.
The fixed broadband market in Slovakia is dominated by the incumbent operator Slovak Telekom, whose infrastructure covers the whole country. Orange, which rolled out its own fiber optic network in Slovakia and markets DSL Internet services via a commercial agreement with Slovak Telekom, is ranked second in this market with a market share of 13% (12).
In the mobile telephony market, Orange competes with three other operators: O2 (owned by the O2 Czech Republic group), Slovak Telekom (owned by Deutsche Telekom) and Swan (national operator). The Slovak post and Swan started to offer mobile services in October 2015, only in prepaid formulas, available in all post offices. Although its market share declined by 1.5 point year-on-year, from 40.8% to 39.3%, Orange remains the market leader. Slovak Telecom is ranked second in value terms, followed closely by O2 (12).
Orange’s activities in Slovakia
In 2018, Orange continued to execute its long-term strategy focused on strengthening its position on the convergent market. This is supported by its solid market share in mobile telephony and by the launch in August of a television service that is enhanced with exclusive content, including Champions League soccer matches, as well as premium HBO movie channels.
Orange continued to expand its 4G network in 2018. It also focused on extending its fixed broadband coverage by increasing its FTTH coverage (which amounted to 0.5 million connectable households at the end of 2018) and launching a satellite TV network.
Orange markets a number of innovative offers, particularly its convergent offer Love. At the same time, Orange has simplified its portfolios of mobile and fixed-line contracts and launched its new flexible Smart Packages contracts for Funfon prepaid customers.
Moldova
Orange Moldova started operating in 1998 and adopted the Orange brand in 2007. Historically present on the mobile segment, Orange launched its fixed and convergent telephony offers in 2017, following the acquisition in 2016 of SUN Communications, Moldova’s main cable operator. In 2018, the Group generated 0.3% of its consolidated revenue in Moldova.
The main telecommunications operators active in Moldova are Moldtelecom (the fixed telephony incumbent operator, also present in the mobile segment under the Unite brand), Orange and Moldcell. In 2018, Orange maintained its position as the number one in the mobile telephony market, followed by Moldcell and Unite (12).
Orange’s activities in Moldova
In 2018, Orange focused on growth in its fixed-line business and convergence offers, in response to the growing demand for data in fixed-price contracts, as well as the acquisition of new customers and the management of its customer base. The offer portfolio and processes have been streamlined to improve efficiency and customer experience.
1.4.4. Africa and Middle East
The Orange group is present in 19 countries in Africa and the Middle East of which 17 where it has controlling interests and two where it has minority interests. Part of the activities of the operating segment in Africa is structured into sub-groups (Sonatel and Côte d’Ivoire). In Africa and the Middle East, Orange primarily operates in the mobile markets, with the exception of countries where the Group controls the incumbent operator (Senegal, Côte d’Ivoire and Jordan) and Morocco, where it also provides telephony and fixed Internet services. In 2018, Africa and the Middle East accounted for 12% of the Group’s consolidated revenue.
1.4.4.1. Sonatel sub-group
The Sonatel sub-group, in which the Orange group has been present since 1997, operates under the Orange brand in the five countries where it is present. Senegal and Mali account for 76% of its business and Guinea, Guinea-Bissau and Sierra Leone for the rest. The Sonatel sub-group has developed gradually, firstly by launching operations in Mali as of 2003, then in the Republic of Guinea and Guinea-Bissau in 2007, and then by acquiring Airtel Sierra Leone in 2016. In 2018, it generated 3.7% of the Group’s revenue.
The mobile markets in which the Sonatel sub-group operates are mainly prepaid markets, largely driven by the rapid development of voice and data usage. These countries are currently experiencing tighter regulations, notably with increased controls on promotions, resulting in the forced suspension of certain offers, particularly in Senegal. At the same time, the different regulators are imposing increasingly strict requirements as to quality of service and compliance with environmental standards. The development of the Sonatel sub-group’s markets continues to be affected by high tax levels.
In 2018, growth in the fixed market was based on the Flybox, TDD-LTE (fixed Internet on 4G) and fiber optic offers.
With respective mobile market shares of 53.1% in Senegal, 59.0% in Guinea (sources: local regulator, 3rd quarter 2018) and 56.9% in Mali (source: GSMA), the Sonatel sub-group is leader in all of its markets with the exception of Guinea-Bissau and Sierra Leone where it is the second largest operator with respective market shares of 47.6% and 31.0% (source: GSMA). Depending on the country, it has two or three competitors: Tigo and Expresso (Sudatel group) in Senegal; Sotelma/Malitel (Maroc Telecom group) and Alpha Telecom (the
Planor-Monaco Telecom International consortium) in Mali; MTN and Cellcom in Guinea; MTN in Guinea-Bissau; Sierratel (the incumbent operator), Africell and QCell (new entrant) in Sierra Leone.
By promoting the development of digital inclusion through its multi-service networks, the Sonatel sub-group contributes to economic and social development in all its operating countries in specific areas: community well-being, good governance, growth and development and protection of the environment.
In 2018, the Sonatel sub-group pursued its growth strategy by focusing on the following areas:
-command of broadband: with the commercial launch of fiber optic and 4G+ in Senegal and Mali and TDD-LTE in Mali;
-expansion to include new sources of growth with the market launch of the Orange Énergie solar energy service contracts in Senegal, Mali and Guinea;
-continuing to open new corridors for voice traffic in the sub-region and internationally;
-stepping up the development of Orange Money which promotes financial inclusion in the sub-region, with a new leadership role in Senegal in national money transfers.
With 4G networks already operating in Senegal, Mali and Guinea-Bissau (the first Sonatel sub-group operating country to launch 4G in 2015), Sonatel continued major works to modernize and extend its mobile network.
1.4.4.2. Côte d’Ivoire sub-group
The Côte d’Ivoire sub-group, in which the Orange group has been present through Orange Côte d’Ivoire since 1996, operates under the Orange brand in three countries. Côte d’Ivoire accounts for 71% of its business and the remainder is split between Burkina Faso and Liberia. The Côte d’Ivoire sub-group expanded through the acquisition of Cellcom Liberia in April 2016 and Airtel Burkina Faso in June 2016. It operates in a geographical region with a population of more than 48 million inhabitants. In 2018, it generated 2.6% of the Group’s revenue.
There were opposing trends in the Côte d’Ivoire sub-group’s markets in 2018 against the backdrop of the launch of the mobile roaming charges harmonization project in ECOWAS Member States, the continued growth of mobile financial services and relative tensions with the regulatory authorities on audits of compliance with mobile license specification requirements (Côte d’Ivoire and Burkina).
In Côte d’Ivoire, 2018 was marked, in particular, by stricter mobile customer identification requirements, resulting in a drop in the market’s mobile customer base, the reconsideration of price differentiation between on-net and off-net calls and the regulator’s heightened vigilance regarding quality of service and coverage level. In 2018, mobile number portability was also implemented in the country.
With mobile market shares of 41% in Côte d’Ivoire (source: Artci, 3rd quarter 2018), 43.3% in Burkina Faso (source: Orange estimates) and 60.5% in Liberia (source: GSMA), the Côte d’Ivoire sub-group is now ranked first in all of the countries where it operates. In Côte d’Ivoire, the sub-group is also the leader in the fixed telecommunications market and in mobile financial services.
The three entities have the following competitors in each of their regions: MTN and Moov in Côte d’Ivoire; Onatel and Telecel in Burkina Faso; MTN in Liberia.
In 2018, the activity of the sub-group was marked by the significant growth in revenue of Orange Burkina but also by the fire that broke out on April 30, 2018 in an Orange technical center in Abidjan which affected revenue growth.
In 2018, the Côte d’Ivoire sub-group continued its development strategy based on the following areas:
-modernization and extension of its mobile networks, notably 4G, in particular to meet requirements for mobile data;
-optimization of energy costs (solar panels, optimization of energy consumption);
-innovation with regard to uses and offers to speed up the development of mobile data;
-promotion of fixed Internet with the development of FTTH in Côte d’Ivoire (more than 8,500 active customers for around 34,000 available connections at the end of 2018) accompanied by content offers and the purchase of an TDD-LTE license (4G fixed Internet) in Liberia;
-extension of services eligible for Orange Money (payment of invoices, international transfers, etc.);
-development of the B2B business, in particular through a differentiated and integrated approach for offers targeting SMEs;
-distribution of integrated solar kits to provide electricity to Orange customers with no access to the electricity grid;
-strengthening of international connectivity.
1.4.4.3. Countries of North Africa and the Middle East
Egypt
The Orange group entered the Egyptian Telecom market in 1998 through a partnership with Orascom and Motorola in the operator Mobinil. It gradually increased its stake following the withdrawal of Motorola in 2000 and Orascom in 2015. Since 2016, all services are marketed under the Orange brand. In 2018, Orange Egypt delisted from the Cairo Stock Exchange. In 2018, the Group generated 1.6% of its consolidated revenue in Egypt.
The buoyancy of the market was driven by the launch of 4G services by all operators in the final quarter of 2017 and the simultaneous increase of 30% in the price of prepaid recharges following the regulator’s decision. At the same time, Telecom Egypt, the incumbent operator until then present only in the fixed-line market, launched a new mobile operator under the brand WE, operating under a roaming agreement with Etisalat.
With a mobile market share of 31.7% (source: GSMA), Orange remains number two on the market, behind Vodafone and ahead of Etisalat.
Among the highlights for 2018, Orange notably:
-launched new mobile Internet offerings contributing to the development of data usage;
-expanded the coverage of its 4G service launched in September 2017 with a focus on Greater Cairo, Alexandria and the Nile Delta region;
-pursued the digitization of customer relations thanks to the success of the My Orange app and the partnership with Jumia to market mobile and 4G offers online.
Within the context of the 4G launch, Orange continued to modernize its access network in 2018 to support the growth in data usage, and notably replaced its old Alcatel Lucent equipment to enhance the capacity and quality of its network.
Morocco
The Orange group entered the Moroccan Telecom market in 2010 through a partnership with Médi Telecom. The company, which was operating under the Méditel brand, became a consolidated subsidiary of the Group in July 2015 after Orange increased its interest to 49% of the capital. Since end-2016, all services are marketed under the Orange brand. In 2018, the Group generated 1.3% of its consolidated revenue in Morocco.
With 33.1% of the mobile market (source: ANRT, 3rd quarter 2018), Orange is the second largest mobile operator in the country (behind the incumbent operator, Maroc Telecom, and ahead of Wana).
In 2018, Orange maintained its sales momentum on the back of:
-the revamping of its portfolio of residential and B2B offers;
-the launch of very high-speed fixed broadband offerings (fiber optic and TDD-LTE) for the Retail and B2B markets;
-simplifying the customer journey and digitizing the customer relationship;
-increasing the penetration rate of smartphones and data users and converting customers to 4G;
-reinforcing its distribution channel and developing the penetration and use of My Orange and E-Care B2B apps.
Orange was the first operator to launch 4G services in Morocco in April 2015, and in 2018 continued to develop its network to support the increase in data traffic. This involved the densification of its 4G network, boosting the capacity of the Core Data network and extending the national and international terrestrial transmission network.
2018 was also marked by measures taken to step up the implementation of the Group’s fixed strategy for both B2C and B2B customers. This strategy is notably based on a new fixed telephony ecosystem that encompasses several partners across the entire value chain. At the end of 2018, the Orange Maroc fiber optic network had around 7,500 customers.
Jordan
The Orange group entered the Jordanian Telecom market in 2000 through a partnership with the incumbent operator Jordan Telecom. The company became a consolidated subsidiary of the Group in 2006 after Orange increased its interest to 51% of the capital. Since end-2007, all services are marketed under the Orange brand. In 2018, the Group generated 0.9% of its consolidated revenue in Jordan.
Orange is the country’s second largest mobile operator, behind Zain and ahead of Umniah. In the third quarter of 2016 (the date of the last publication by the Jordanian regulator), its market share of the mobile segment was 32.4%.
Orange is also present in the fixed-line market through its ADSL Internet offers as well as FTTH, launched in 2016. In this segment, its competitors are Zain and Umniah, which use Wimax and TDD-LTE technologies, as well as fiber in the case of Zain.
In 2018, Orange pressed ahead with its development strategy with the following focus areas:
-the revamping of its portfolio of mobile offers, in particular to address the youth market;
-the exclusive development of very high-speed Internet and mobile 4G+ offers and fixed offers with the massive deployment of fiber in the capital and some large cities;
-reinforcement of international outgoing traffic with an increase in the number of corridor offers, in particular for Egypt;
-support for large B2B accounts.
Orange is continuing to contribute to the country’s digital transformation by supporting start-ups in its accelerator program, by helping women learn to code (Orange Digital Centers), by accompanying its B2B customers (especially with its Datacenter), and via a highly ambitious internal digital transformation plan that includes the launch of chatbots (for in-house purposes as well as for its customers) and the first use of robots.
Tunisia
Orange Tunisie launched its activity in May 2010 after acquiring its license in July 2009. The Orange group is a partner with 49% of the capital.
Orange’s mobile market share was 26.6%, up slightly on 2017, placing it in third position behind Ooredoo, which maintains its leading position, and Tunisie Telecom. Orange also confirmed its leadership in the segments of 3G and 4G keys with a market share of 51% (source: Instance Nationale des Télécommunications, 3rd quarter of 2018).
In 2018, Orange Tunisie created momentum for its B2B business which succeeded in winning several major accounts on the Tunisian market and recorded revenue growth of almost 14% compared with 2017.
Orange Tunisie also improved its performance in the mobile and data markets with the launch of several innovative offers, together with the Best Retail Network program and by strengthening its presence on digital platforms.
In terms of the network, Orange Tunisie continued to work on the extension and densification of 4G coverage by refarming certain frequency bands. In addition, Orange Tunisie was ranked "Best Mobile Data Operator in Tunisia" in 2017 following the survey conducted for the first time by Nperf in Tunisia.
1.4.4.4. Countries of Western and Central Africa
Democratic Republic of the Congo
The Orange group entered the Congolese telecom market in 2011 through the acquisition of Congo Chine Telecom. In 2016, Orange acquired Oasis, the Congolese subsidiary of the Millicom group, which operated under the Tigo brand. In 2018, Orange RDC generated 0.6% of the Group’s consolidated revenue.
With a market share of 31.6%, Orange is the second largest mobile operator in the country behind Vodacom and ahead of Airtel and Africell (source: Arptc, 2nd quarter 2018). All operators hold and operate 3G licenses and 3 out of 4 acquired a 4G license in 2018.
2018 was marked by strong momentum driven by the sales teams, as well as the attractiveness of the offers, in a stable economic climate (after the sharp devaluation from mid-2016 to mid-2017). This made it possible to break through the symbolic 10 million customer barrier in the second half of 2018 (source: GSMA).
Furthermore, in 2018, the upgrading of the old Orange and Tigo networks was completed, enabling Orange to offer extensive 3G coverage and to differentiate itself from competing operators. 4G was launched in the three major cities (Kinshasa, Goma and Lubumbashi).
Cameroon
The Orange group has been present in Cameroon since the liberalization of the Telecom sector in 1999. All services, initially launched under the Mobilis brand, have been marketed under the Orange brand since 2002. In 2018, the Group generated 0.7% of its consolidated revenue in Cameroon.
With a market share of 34.9% in 2018 (Source: GSMA), Orange is the country’s second mobile operator, behind MTN and ahead of Nexttel.
In 2018, against a backdrop of a declining global market, Orange Cameroun made a return to strong revenue growth thanks to the strong growth of Orange Money and the mobile data business.
Niger
The Orange group has been present in Niger since 2008 as the fourth entrant. In 2018, Orange Niger contributed 0.2% to the Group’s consolidated revenue.
With a market share of 24.1% (source: Arcep, 2nd quarter 2018), Orange is the country’s third largest mobile operator, behind Airtel and Moov and ahead of Niger Telecom.
In 2018, the tax burden was significantly heavier and the Niger government restricted taxpayer recourse to litigation procedures. In addition, on January 1, 2019, the government reintroduced the "International Incoming Traffic Termination Tax" (TATTIE), despite its adverse effects on traffic volumes.
In 2018, Orange Niger opened IRT corridors (international money transfer via Orange Money) with other Orange subsidiaries in the sub-region and with Benin thanks to an agreement signed with MTN Benin. Orange Niger also continued its strategy to modernize and improve its 2G/3G mobile network.
Botswana
The Orange group has been present in Botswana since 1998 and since 2003 under the Orange brand. In 2018, the Group generated 0.2% of its consolidated revenue in Botswana.
In a saturated market, with a penetration rate of 141%, Orange is the second largest mobile operator with a market share of 32.7%, behind Mascom and ahead of Be Mobile (source: GSMA).
In 2018, Orange’s market share increased significantly thanks to a robust commercial momentum. With its unlimited voice and data offers, Orange continued to develop the B2B market and consolidated its leading position in mobile financial services via the Orange Money offering.
Orange was the first operator to launch 4G in 2015, and in 2018 it pressed ahead with its strategy of deploying the mobile broadband network in the country’s main cities, modernization of the radio access network and densification of broadband access.
Madagascar
The Orange group has been present in Madagascar since 1998 and since 2003 under the Orange brand. In 2018, the Group generated 0.2% of its consolidated revenue in Madagascar.
Orange is the third largest mobile operator in the country with a market share of 25.8% (source: GSMA), behind the incumbent operator Telma and Airtel and ahead of MVNO Blueline.
In 2018, Orange’s activity in Madagascar was marked by the launch of new abundance voice and data offers. Orange also developed its Orange Money financial service business by offering innovative "pico" and "micro" credit solutions with the M-kajy offer.
Orange launched 4G in early 2017 and throughout 2018 pursued its deployment and densification strategy for the mobile broadband network in the main cities and major tourist sites in the country.
Central African Republic
The Orange group entered the telecoms market in the Central African Republic in 2007 as the fourth entrant. In 2018, the Group generated 0.1% of its consolidated revenue in Central African Republic.
With revenue growth of around 15% in 2018, Orange is the second largest mobile operator in the country with a market share of 39.1%, behind Telecel and ahead of Moov and Azur (source: TeleGeography GlobalComms Database, 2nd quarter 2018). Orange Centrafrique is the leading player in the Mobile Money activity launched in April 2016. The main operational achievements in 2018 relate to the upgrading of mobile data offers and the densification of the Orange Money distribution network. Orange also continued to extend its radio coverage throughout the country (19 cities covered by 3G, making Orange Centrafrique a key player in the provinces), boost international satellite capacity and modernize the B2B access network.
Mauritius
The Orange group has been present in Mauritius since 2000 through a partnership with the incumbent operator Mauritius Telecom, in which it holds 40% of the capital.
Mauritius Telecom is the leader in Internet and fixed-line Telecom services in Mauritius, ahead of DCL, and in mobile services ahead of Emtel and MTML (source: GSMA).
The operator offers a comprehensive range of fixed and mobile data and voice services. It also offers convergence packages (voice, IP and TV) through its MyT service. The first operator to launch 4G and mobile payment services in 2012, Mauritius Telecom launched its fiber optic network (FTTH) in 2013.
The main growth drivers for Mauritius Telecom lie in content, in particular with a strategy of investing in premium content, enabling Mauritius Telecom to strengthen its position as the market leader.
The company also offers international connectivity via fiber optic submarine cables.
1.4.5. Enterprise
Operating under the Orange Business Services brand, Orange is one of the world leaders in supporting the digital transformation of enterprises. As an infrastructure operator, technology integrator and value-added services provider, Orange Business Services has a complete portfolio of offers designed to assist key accounts, local authorities and SMEs in France as well as multinationals around the world to carry out their digital transformation projects and implement their communication projects. Orange Business Services provides its clients with a high level of expertise to collect, transport, store, process, analyze and share their data and create value, while ensuring enhanced protection for this data at every stage. In 2018, the Enterprise segment, which includes the Orange Business Services activity, contributed 16.7% to the Group’s consolidated revenue.
The market
The B2B market for communication services and IT services is part of the wider ICT market, which combines the technologies used in the processing and transmission of information. In 2018, it accounted for just over 1.2 trillion euros (1.4 trillion dollars) worldwide (source: Gartner, 3rd quarter 2018), up 3% on a constant currency basis. The value of this market by region breaks down as follows: North America for 39%, Asia Pacific for 26% and Europe for 24%. The markets for consulting and integration services and for managed services and Cloud infrastructure services grew in 2018 and respectively accounted for 29% and 28% of the world market in value terms (source: Gartner, 3rd quarter 2018).
The B2B telecommunication services market is shared by many players, notably telecommunications operators, network integrators, managed IT service providers, and Internet or digital players (GAFAM). Given the large number of players, there is no reliable, relevant information available on market shares.
Orange Business Services activities
Orange Business Services (OBS) offers a wide range of products and services, including those that are packaged or tailor-made and using different methods such as integrated, managed or Cloud, aimed at accompanying businesses in their digital transformation, structured around their main challenges (connectivity, mobility, streamlining of processes, fluidity of exchanges with customers and support for their projects).
OBS has structured its portfolio of offers around four main types of products and services:
-fixed telephony (traditional and IP) and audio conference services;
-enterprise mobile telephony offers;
-network offers, including certain service guarantee levels (mobile and fixed-line connectivity, data transfer, hybrid networks, fixed-line and mobile convergence offers);
-IT service offers and integration solutions, including:
-unified communication and collaboration services (interoperability between telephony, messaging and video conference solutions, in triple play or quadruple play),
-IT/Cloud solutions (virtualization, systems integration, business applications, API, building blocks for connected objects, Big Data and analytics),
-managed and integrated or Cloud cyber-defense solutions covering infrastructures and users (safe work environments and infrastructure, cyber-defense, management and governance), supervised from a Cybersoc (security operations center),
-consulting and customer services (analysis of needs, solutions architecture, deployment and installation support, user training, administration of services and solutions) in various areas: switching to "all-IP", adopting Machine to Machine and the Internet of Things, supervising and managing quality of service, switching to Cloud infrastructure solutions, digital transformation of enterprises.
These offers are also used to develop cross-sector business solutions (finance, transport, energy, government and public sector, geolocation and fleet management, etc.).
OBS relies on international partners to supplement its offer and geographical coverage in areas where its customers operate and where its presence does not offer a comprehensive solution. OBS is working to build this type of partnership in the most developed markets, preferably with the leading operator or its direct competitor, like NTT Communications in Japan or AT&T in the United States.
OBS also works closely with an ecosystem of leading international partners in each of its areas of activity.
In 2018, OBS concluded a series of major contracts to support its customers around the world, in particular: Siemens AG, with the expansion and digitization of its network worldwide; Enedis in its industrial project to transform its electricity distribution networks into smart electricity grids; Nova Veolia and its subsidiary Birdz in the digitization of remote water meter reading services in France; and, Dobroflot Group of Companies in developing an IoT solution for controlling the fuel used by its fishing fleet.
In 2018, Orange Business Services also pursued its strategy of becoming a global player in digital transformation and accelerated its shift to services through several acquisitions:
-Business & Decision, an international consulting and systems integration group with 2,500 employees, with the objective of reinforcing OBS’s leadership as an operator and data services integrator in France and internationally;
-Basefarm, a leading European player in the fields of infrastructure, Cloud services, critical application management and data analysis;
-and Enovacom, publisher of software for the exchange, sharing and security of health information systems.
1.4.6. International Carriers & Shared Services
The operating activities of the International Carriers & Shared Services segment include:
-international carrier activities undertaken by the International Carriers Division (roll-out of the international and long-distance network, sales of international telephony and services to international carriers and installation and maintenance of submarine cables);
-and the activities of OCS and Orange Studio in content.
The segment also includes other cross-cutting activities of the Group, in particular research and innovation (see Section 1.6), or real-estate (see Section 1.5.2); as well as support and shared activities including headquarters corporate functions.
The operating activities of the segment accounted for 2.3% of the Group’s consolidated revenue in 2018.
1.4.6.1. International Carriers’ activities
The market for wholesale operators is made up of three categories of player: global wholesalers, multinational retail operators (including Orange) and regional players or specialists.
The wholesale market’s customer base comprises voice market specialists (call-shop, prepaid cards), fixed and mobile domestic retail carriers (including MVNOs), Internet access and content providers and OTT players. International carriers also sell wholesale traffic to each other.
Orange International Carriers offers a broad range of solutions on the international market. Its business is structured on a large infrastructure of long haul networks. Its presence in both the retail and wholesale markets means it can develop solutions that are particularly well adapted to the needs of the retail operators. Orange has more than a thousand clients.
The Group is notable for being heavily involved in the design, construction and operation of submarine cables. With its ownership or co-ownership of several cable systems, Orange ranks among the world’s largest owners of submarine links. This has enabled it to satisfy the increase in transatlantic traffic.
The Group’s wholesale activity is based on:
-a seamless global network (13) and an IPX (13) protocol network supporting voice and data with points of presence around the world;
-a global network of dedicated IP routes with end users in more than 220 countries, connections to more than 200 Internet service providers, and connectivity in over 100 countries in a single IP network hop;
-99.99% network availability, 24/7 centralized network supervision.
In 2018, voice traffic reported by Orange’s International Carriers business remained stable, while data traffic increased by 37%.
Offers
Voice Services
Orange’s voice network has switched or all-IP (13) routes to 360 operators, coverage in more than 1,200 destinations, and 24/7 technical support.
Services to Mobile Operators
Orange supports over 200 mobile operators worldwide by providing interconnection as well as SS7 (13) and LTE signaling services together with high value-added services and GRX/IPX (13) transport services. Orange also provides roaming, 3G/4G and messaging solutions.
Orange is involved in preparing GSMA (13) standards and has expanded its LTE and IPX connectivity both directly and via peering agreements (13). The Group provides value-added mobile services solutions, such as an SS7 security offer, a secure messaging (SMS) offer, and Big Data.
Orange provides 4G roaming connectivity, on IPX, to a growing number of operators and continues to expand its coverage. This offer allows mobile operators to provide their customers with a 4G roaming service. Since the entry into force of free roaming in Europe in June 2017, international voice traffic via Orange France increased by about 40%.
Internet and Transmission Services
Orange’s adjustable solutions meet the specific needs of Internet service providers and content providers. The offer includes a large range of connection offers on all continents, including investments in 2018 in Dunant submarine cable (between France and the United States) and in Kanawa (securing Internet connections in French Guiana).
In 2018, Orange expanded its Internet coverage in Europe with the recent deployment of new points of presence, particularly in Romania, providing faster connection speeds and enhanced security.
Convergence Services
Orange provides IPX solutions (13) through its Multiservice IP eXchange offer. This service gives operators access to voice and mobile data services over a single connection. It can also optimize quality of service and network costs.
Security and anti-fraud services
To protect the value of its customers’ business, Orange International Carriers offers solutions covering the protection of identity and privacy and that of its networks, mobile traffic and voice traffic.
The portfolio of anti-fraud and security offers comprises voice, Internet and mobile service solutions designed to protect IP and SS7 transit networks and combat voice and messaging (SMS) fraud.
These offers include audit, detection and protection functions as well as the provision of analysis reports. The portfolio also contains offers specifically to fight the dangers of cybercrime and it is now possible for Orange International Carriers’ customers to resell some of these offers to their own clients.
Orange Marine
Orange Marine is a major player in submarine cables, from the early research and engineering stage through to the setting up of intercontinental connections and the maintenance of existing cables. Orange Marine has installed more than 240,000 kilometers of submarine cables (including 28,000 kilometers of buried cables) across all oceans. Its vessels carried out close to 800 repairs on defective cables, some of which were performed at a depth of 5,000 meters. Orange Marine has a cable-laying fleet of six vessels. It represents 15% of the global fleet and is one of the most experienced worldwide.
1.4.6.2. Content activities
Content distribution activities (TV, video-on-demand, music, video games) are a key component of Orange’s strategy as a multi-service operator with more than 9.5 million households connected to its TV universe at the end of 2018. These activities help promote the Group’s very high-speed broadband, fiber optic and 4G offers. In 2017, the Group created a cross-functional entity, Orange Content, to manage its content strategy and support all Group countries in these activities.
Orange’s content strategy is primarily based on developing partnerships with rights holders and service publishers. Orange is focused on its role of aggregator and distributor by referencing the best entertainment services available in order to offer them to its customers through its broadband networks.
Orange is also developing an ambitious strategy for producing and co-producing films and series, as well as publishing via its subsidiary Orange Studio and its premium OCS service (formerly, Orange cinéma séries). All of these programs are available in linear broadcast form and on demand. They are offered by most distributors in France and available live on the Internet. At end-2018, OCS had 2.9 million subscribers.
In 2018, Orange notably invested in two international series, "The Name of the Rose" and "Devils", which will be broadcast on OCS, and co-produced the movie, "Les Chatouilles" which was nominated for the Cannes Film Festival. In addition, at the end of 2018, Orange Studio launched the development of two series based on original works. At the same time, Orange Studio continued to enrich its catalog and launched an international sales activity via an agreement with UGC.
In 2018, Orange also renewed its commitment with professional movie organizations to invest, through OCS, in French and European movie productions, increasing its commitment to 125 million euros over the next three years. Orange also ratified the new media time-line which will shorten the time required for movies to be broadcast on OCS after their theater release date.
In Europe, the Group is pursuing the roll-out of content services, notably related to TV, a key element of convergence offers. As such, Orange is marketing TV channel packages in Spain based on soccer offers (La Liga and Champions League) whose distribution rights were renewed for the 2018/2019 season, and has launched its Orange Series 4k channel. The Group’s other European subsidiaries are also developing this TV strategy, for example in Slovakia, with the launch of a satellite offer and an Orange Sport channel in August 2018 which offers exclusive coverage of the Champions League.
In Africa, Orange also continued to enhance its TV offers and ventured into production, particularly in Senegal with the Diamond House series. In the mobile sector, Orange also developed distribution partnerships in 2018 with several content publishers (video, games and music). In the video-on-demand segment, Orange offers programs from the catalogs of the major distributors.
The music market confirmed its revival in 2018 with growth in activity driven by streaming. In mid-2018, Orange reinvested in Deezer, which has been a partner of the Group since 2010. The number of paying subscribers has continued to grow and the service is now available in France, Spain, Romania, Luxembourg and Cote d’Ivoire. At the same time, Orange continues to roll out its Orange Radio service, which is now available in 17 countries.
In the video games sector, the Orange TV games streaming offer continued to grow in 2018. In the mobile segment, the success of the unlimited contract and Freemium games continued, with the relaunch of the Orange Juegos offer in Spain and sustained momentum in the African countries where the number of Orange mobile-game customers exceeded the million mark. In response to the real craze for eSports in Africa, Orange organized the first Orange eSports Experience in 2018, the first pan-African video game competition that brought together people from about ten countries for the Dakar final.
1.4.7. Orange Bank
Business diversification is one of the major pillars of the Orange group’s Essentials2020 strategy. The launch of Orange Bank on November 2, 2017, underscores the Group’s ambition to diversify into mobile financial services which offer significant growth prospects due, notably, to Orange’s in-depth knowledge of customer uses and expectations. With Orange Bank, the Group is aiming to provide a simple offer based on a smooth, personalized customer experience, as in Africa where the payment and money transfer service offered by Orange Money has enjoyed success for several years.
After France, the Group is planning to launch Orange Bank in Spain at the end of 2019.
The banking market
Although the banking market in France is still largely dominated by traditional banks, some new models are beginning to make their mark. In 2018, online banks had a market share of 3% (source: KANTAR-TNS, February 2018) (14).
The whole sector, which is undergoing far-reaching change, has become highly digitized. There are six major categories of player:
-the major traditional banking networks (which are gradually adapting their offers to the new situation). For example, La Banque Postale, which is preparing to launch Ma French Bank in 2019;
-online banks (of which some are subsidiaries of the traditional major banking networks) which developed mainly during the 2000s (Boursorama Banque, ING Direct, etc.);
-neo-banks, set up in the 2010’s, which are based on a mobile application and simplified customer experience. Some have a banking license, others do not (N26, Revolut, Compte Nickel, etc.);
-Fintechs (financing platforms, means of payment and account aggregators);
-the tech giants who offer mobile payment solutions: Apple Pay, the Facebook Messenger payment function, Samsung Pay and Android Pay, etc. Through banking licenses, they can now directly offer financial services;
-lastly, large retailers (Carrefour, Leclerc, Fnac Darty, etc.), which aim to take a share of the mobile financial services value chain. Some of these brands already have banking subsidiaries and offer a range of services from bank accounts to consumer credit. Others offer means of payment to generate customer loyalty, better know customers and avoid "disintermediation" by losing payment-related data.
Orange Bank activities
Orange Bank is positioned at the frontier of the banking and telecom sectors. Its business model aims at combining the features of all of its competitors in a single offer.
Modeled originally on the mobile uses of customers, the offer carries no conditions related to income, savings or minimum balance. There are no bank charges attached to accounts and their associated bank cards (subject to certain terms and conditions of use). All basic banking services are offered: bank account, bank card, checkbook, authorized overdraft, savings account, à la carte insurance and personal loan. Customers can perform all their banking operations on a mobile handset. When opening a bank account, customers have access to a network of more than 200 approved stores.
Strongly relying on telecoms functions, Orange Bank’s innovations offer customers the option of making contactless payments with credit cards or via mobile handsets, gaining immediate access to their bank account balance, temporarily blocking and unblocking their credit card from the application and sending money by SMS. Customer relations are based on the virtual advisor, Djingo, the bank’s first point of contact, available 24/7. Since the launch, there have been more than one million discussions, of which 50% were managed entirely by the virtual advisor without redirection to the customer relationship center.
2018 was particularly notable for the launch of a personal loan offer in March. Orange Bank has also received several awards, and was notably rated "best digital customer experience" in July 2018 by the D-Rating agency (no. 1 out of 18 banks evaluated on the basis of 400 criteria).
Orange Bank had 248,000 customers at December 31, 2018.
1.5. Networks and real-estate
1.5.1. Orange’s networks
For Orange Group, the networks are a strategic asset and, as such, are subject to constant supervision, maintenance and modernization.
At end-2018, Orange operated networks in almost 30 countries to serve its customers in the consumer market and in nearly 200 countries or territories to serve its Business customers. In line with its Essentials2020 strategy (see Section 1.2.2 The Orange group strategy), Orange continues to modernize its networks in order to provide its customers with ever greater and enhanced connectivity wherever it operates.
The Group’s investments in its networks, other than those to maintain their quality (pole, cable and pylon replacement) are designed to improve these networks in a number of respects:
-the development of very high-speed fixed and mobile broadband (FTTH and 4G), increased data transfer volumes and reduced connection latency. These investments concern all of the networks, from the mobile radio network and household Internet connectivity to submarine cables;
-implementation of the program to switch all services over to the IP infrastructure ("all-IP" program);
-the gradual virtualization of network control functions ("programmability" of networks so that they can be adapted more quickly to new services and uses);
-automation of network operation which improves the quality of service for customers.
The network architecture is broken down into (i) access networks (fixed or mobile), (ii) transmission and IP transport networks and (iii) service control networks.
Access networks connect each customer, whether an individual or a business customer, and provide a first level of customer data aggregation. Transmission and IP transport networks connect the access networks between them and with the service and data servers, which may be located in other parts of the world. Service control networks, which drive access, transmission and IP transport networks, provide the connection between people and manage the services (voice, TV, Internet access, data).
A glossary defining several of the technical terms used in this section may be found in Section 7.2.2 at the end of this Registration Document.
1.5.1.1. Access networks
Fixed access networks
Analog access and ADSL/vDSL broadband access
Copper access is made up of a pair of copper wires that connect each customer to a concentration point and give the latter access, via the distribution and transport network, to a local switch. It is used to deliver analog voice services and broadband access services.
Orange operates copper access networks in France and Poland, and in various countries in Africa and the Middle East (Côte d’Ivoire, Jordan, Senegal), to provide analog voice access services and data to the Retail, Enterprise and wholesale markets.
Fixed broadband ADSL/vDSL access (for voice applications, Internet access and television) is available:
-in France and in Poland, with coverage approaching 100% on the incumbent local loop;
-in the Africa & Middle East countries, where Orange is the operator of the copper local loop;
-in other countries (including Egypt, Spain and Slovakia), where Orange uses the local loop of the incumbent operators, either unbundled or via bitstream-type offers;
-in Belgium and Romania, where broadband offers are marketed using the network of third-party operators;
-in Moldova where, following the acquisition of Sun Communications, Orange operates a cable network.
Very high-speed broadband fiber optic access
FTTH (Fiber To The Home) network access can extend the available broadband ADSL/vDSL service offer to include upstream and downstream very high-speed broadband (of 100 Mbits/s and more), with improved performance, in particular response time.
In France, Orange has been deploying FTTH access for some ten years using GPON technology, which can pool several very high-speed broadband accesses on a single fiber without impairing the capacity of each access point’s capacity to increase speed. The deployment
of the FTTH network started in 2007 in a few major French cities and was then expanded to all large cities. During the years 2011 and 2012, Orange entered into sharing arrangements with other telecoms operators to speed fiber optic rollout. At end-2018, Orange was the leading fiber optic network in France with 11.8 million households eligible for Orange Fiber (see Section 1.3 Significant events of 2018).
In Spain, Orange is also deploying fiber and its FTTH network reached 13.8 million connectable households at end-2018. An FTTH network was also deployed in Poland, with connectivity offered to some 3.4 million households, as well as in Slovakia with 500,000 connectable households. The deployment of FTTH networks has also started in Jordan, Côte d’Ivoire, Morocco and Senegal.
Radio and satellite access
In a number of African countries, fixed services are available through 3G/UMTS, or Wimax. These services are gradually migrating to 4G/LTE technology. In Eastern Europe, fixed services are provided through 4G/LTE in addition to copper and fiber optic networks.
In addition to copper, fiber and radio access, fixed residential access and satellite television services are also marketed via satellite capacity rental.
Mobile access networks
The GSM (2G), UMTS (3G) and LTE (4G) access networks support voice and data communication services that reach several tens of Mbits/s, at an average bit rate, and up to several hundreds when conditions are optimal, which makes it easier to send and receive voluminous content (audio, photo and video). The Group operates a mobile network (2G/3G/4G) in each of the countries where it offers retail consumer telecommunications services.
To reduce its environmental impact and operating costs, Orange shares more than half of its radio sites with a competitor. Sharing can be either "passive" (limited to the masts only), or "active" (masts and active equipment).
2018 was marked by:
-continued growth of uses and traffic, across the Group’s networks. To anticipate this growth, which will continue over the coming years, the Group invested in its networks to increase their capabilities and performance;
-preparing for 5G, particularly with preparations for the optical fiber connectivity of radio sites, in anticipation of needs related to 5G very high-speed broadband;
-continued rollout of 4G/4G+ networks in Europe to increase the coverage of the population and speeds;
-continued 4G deployments in the MEA region, with 14 of the 20 countries in the region commercially covered at end-2018;
-for the Internet of Things (IoT), continued deployment of LTE-M technology on the 4G network in European countries.
1.5.1.2. Transmission and IP transport networks
National networks
In each country where there are retail customers, Orange has a national IP transport network relying on a transmission network. This infrastructure is primarily made up of fiber optics, but also radio links, especially for alternative or purely mobile networks in MEA countries. These networks support voice and data traffic, for fixed, mobile, enterprise and wholesale services.
In France, a dedicated Enterprise IP network is also in service. The main purpose of this network is to connect a company’s French sites for internal data exchange on a Virtual Private Network (VPN) and provide it with Internet connectivity. It also provides Voice over IP transport for companies.
Optical links offer a bandwidth of up to 100 Gbits/s per wavelength, and Dense Wavelength Division Multiplexing technology (DWDM) makes it possible to have 80 wavelengths per fiber. Orange is one of the world leaders in the use of advanced optical functions in order to have a more flexible transmission network. For example, in a first of its kind worldwide, Orange deployed a 400 Gbits/s per wavelength optical link between Paris and Lyon in 2013.
Furthermore, Orange offers direct connections by fiber optic to business customers, providing them with very high-speed broadband services.
In the MEA region, Orange is the no. 1 telecommunications operator in kilometers of terrestrial transmission networks deployed (national and multi-country) with over 20,000 km.
International network
This international network relies on three networks:
-the European WELDON (WidE Long distance Domestic Optical Network) network, a long-distance network in France, whose deployment started in April 2012, and which was extended to serve Frankfurt, London, Barcelona, Madrid, and submarine cable stations. It is expected to be extended to other areas neighboring France as needed in the future;
-the North-American backbone served by the two arms of the TAT-14 transatlantic cable system;
-and the Asian backbone in Singapore served by the SEA-ME-WE3 and SEA-ME-WE4 submarine cables.
Satellites
Orange uses satellite communications to provide VSAT services (Very Small Aperture Terminal) to Orange Business Services’ terrestrial or maritime customers and to ensure connection with isolated mobile sites in Africa and IP or voice connectivity to other operators. To provide those services, Orange purchases space segment from satellite operators (such as Eutelsat, Intelsat, SES and Arabsat).
Submarine cables
To address the strong growth in international telecommunications traffic and in a highly competitive market, Orange is maintaining its level of investment in submarine cables and is continuing to develop its network in order to meet the needs of its customers. Due to the high cost of investments required in the construction of cables, such investments are carried out with the different players involved (operators, private companies, GAFAM) and in various forms (consortiums, purchase of user rights, transmission-capacity rental, etc.)
Orange is part of some 50 consortiums covering various routes: North Atlantic, Caribbean, Europe-Asia, Europe-Africa. In 2018, the Kanawa cable linking Martinique and French Guiana was deployed, various cables were upgraded and some new projects launched (Dunant in the North Atlantic, and PEACE between Europe, East Africa and Pakistan).
1.5.1.3. Service control networks
National networks
Control network
In all countries where it has access and transmission/IP transport networks, Orange operates a control network (also called signaling network). This network manages calls or data connection, updates of location data for mobiles, roaming and SMS. These networks are upgrading to new standards, for example to manage 4G roaming.
Fixed-line voice network
In the countries in which it has fixed-line operations, Orange operates a switched telephone network (STN) to deliver analog voice and ISDN digital services. These networks are continually being optimized because of declining usage. In France, Orange stopped marketing its analog voice services at the end of 2018, and announced the first zones where voice services will only be available using IP technology from the end of 2023.
Orange also rolled out fixed-line VoIP networks using IMS technology (IP Multimedia Subsystem) in many countries for residential and business uses.
Mobile voice network
Until 2015, all mobile voice traffic was managed in switch mode by the mobile network in each country. In 2015, Orange rolled out mobile IMS infrastructure in Europe to offer VoLTE services (VoIP over LTE) and VoWifi (mobile Voice over WiFi). The first commercial application of this technology was in Romania, with the launch of VoLTE in September 2015. At end-2018, VoLTE and VoWifi were used by millions of customers in our European networks.
International networks
Voice network
Orange has international switching nodes (CTI 4G) to manage voice traffic to and from France in the fixed-line and mobile markets for retail customers, businesses and operators, and to centralize the transfer of international traffic for its subsidiaries. These switches, initially in circuit technology (TDM), have developed into hybrid NGN nodes to carry Voice over IP (VoIP) traffic.
Orange also operates a network for the supply of voice services for international businesses which is based on the international IP MPLS network.
Signaling network
Orange operates an international signaling network to manage the signaling associated with voice traffic, roaming and SMS of 2G and 3G mobile operators. This network is developing so that it can handle, in addition to SS7 standards, new standards such as IP SIGTRAN and DIAMETER.
Several centralized platforms have been rolled out on the international transit points to provide value-added services to mobile operators.
1.5.2. Real-estate
The Orange group’s real-estate is made up of office buildings, technical buildings and points of sale. At December 31, 2018, the real-estate assets recorded in Orange’s balance sheet had a net carrying value of 2.48 billion euros, compared with 2.54 billion euros in 2017.
Making full use of real-estate as one of its key transformation drivers, Orange is pursuing an ambitious program throughout France, comprising some fifteen major projects scheduled for delivery between 2018 and 2023.
At end-2018, Orange occupied in France 25,190 sites (including 211 with a surface area greater than 5,000 sq.m.), covering a total area of 5.5 million sq.m. including 2 million sq.m. of leased space and 3.5 million sq.m. of fully-owned space. A number of subsidiaries abroad also have significant real-estate portfolios, in particular Poland with 12.3 million sq.m. of land, including 1.6 million sq.m. of developed land.
In France, 84% of technical buildings are fully-owned, while 58% of service buildings are rented.
The buildings are very varied in terms of sizes and purposes.
Some service campuses, such as Orange Gardens in Châtillon, and by 2020, the Lyon 2020 project, as well as the Group’s future headquarters in Issy les Moulineaux, have surface areas of more than 50,000 sq.m. for thousands of employees.
The technical buildings, some of which are unoccupied, are being continuously streamlined: some buildings have been sold, while there are new constructions to cater to new needs. Two new Data centers in Val de Reuil and Chartres will thus be delivered in 2020.
In 2018, the Group pressed ahead with the transformation of its points of sale in line with the Smart Store concept, while also taking into account the launch of Orange Bank and the need to install ATMs in some stores.
Within the context of its energy and environmental policy, Orange is looking to obtain the best environmental certifications for its buildings under construction.
In 2018, the Group pledged to adopt a certified Global Management System approach that already covers several of its buildings, particularly its head office, and enables it to achieve "High Environmental Quality Operations/Sustainable Management" certifications. In 2019, new buildings currently under construction in Lille and Rennes will be included in this approach.
At the international level, a number of significant projects are either ongoing, notably the headquarters of Orange Côte d’Ivoire, or being studied, such as Orange Guinée’s and Orange Mali’s headquarter buildings and the extension of Orange Sonatel buildings in Dakar.
1.6. Research and innovation
In the information and communication technology (ICT) sector, which is undergoing major change in its value chain with the increase in the number of players and the creation of new economic models, innovation is a major growth engine for the Orange group. It is supported by a community of around 6,000 persons, including 640 researchers. In 2018, the Group continued its research and innovation activities devoting 700 million euros (i.e. 1.7% of revenue) to them including employee costs, as well as operating and investment expenditure related to research and innovation for new products and services.
1.6.1. Research and innovation
Orange is currently a leading private player involved in digital research in France. The Group is developing an open, influential and differentiating research approach that is at once accessible to all and focused on a positive view of progress. Research and innovation are key to future growth and a differentiating factor for Orange vis-à-vis its competitors.
In order to achieve its goals in research and innovation, Orange has established a network of expertise spanning four continents. Technology and Global Innovation division employees work closely with innovative ecosystems, with start-ups and developers to accelerate innovation. Orange researchers investigate technological breakthroughs, new usages and innovative economic models. They invent the technologies required to deploy the networks and services of the future.
In response to new waves of technology and to help create the applications of the future, Orange group’s research is organized into nine areas: digital personal life, digital society, digital emerging markets, the digital company, ambient connectivity, software infrastructure, the Internet of Things, data and knowledge, and trust and security. Moreover, in 2017, Orange launched three "integrative research" platforms, that are open to its customers, the Group and its ecosystems in order to identify and channel technological breakthroughs and uses and to build key assets.
Orange is convinced that using artificial intelligence (AI) in a responsible way will open new prospects for the individual, society and the planet. It will improve the management of cities and regions, transport, resources (energy, financial resources, etc.) and knowledge. With over 130 internationally recognized specialists and more than 200 hires planned in the AI field between now and 2020, Orange is making a growing contribution to supporting the AI sector in France and Europe. In particular, it is partnering with Microsoft’s AI School, backing start-ups and the creation of the think tank Impact AI dedicated to responsible AI with members of the French digital ecosystem, and participating in the European agenda on AI.
Orange is actively preparing for the arrival of the 5G network with all the players involved (research organization, other operators, manufacturers, entrepreneurs and large companies) to get a better under-standing of the issues, new business models and new uses, and therefore be able to take advantage of all the opportunities offered by 5G. For Orange, the development of 5G will be based on three main areas: enhanced mobile broadband to accommodate the growth in uses (with a speed ten times faster than 4G); an alternative to access very high broadband in countries where fiber infrastructures are little deployed; and, finally, the deployment of new services to support the digital transformation of companies.
The Internet of Things (IoT) is one of the diversification areas in which Orange is aiming to become a key player in Europe on the retail and Enterprise markets. In 2018, Orange pursued the deployment of its IoT networks in Europe (LoRa® and LTE-M). On the Enterprise market, Orange emphasizes ready-to-use offers notably with the launch of Smart Tracking, a solution designed to localize and track goods and equipment, which includes beacons, connectivity, a collection platform (Live Objects) and a visualization portal to trace objects. On the retail market, Orange launched in Spain Serena, a helpline for senior citizens, and Alarma de Orange, a telemonitoring service. On the French market, the launch of Maison Protégée, a telemonitoring offer, and Maison Connectée, a service to connect devices directly to the Livebox, operate them remotely, monitor their use and analyze their consumption, is planned for spring 2019.
In addition to 5G and IoT, Orange is focusing its connectivity innovation on the virtualization of networks (which allows the emergence of new services and offers greater flexibility) as well as their automation. So-called Self-Organizing Network (SON) features are integrated in the latest generation of mobile networks.
Orange presented its key innovations before an audience of 1,000 business leaders, decision-makers, tech experts and journalists at the 6th edition of Show Hello. Flagship event in the French digital landscape, it underscores Orange’s innovative expertise. Among the innovations presented was the Djingo smart speaker developed with Deutsche Telekom, within the framework of the European AI alliance. Djingo, which is also voice controlled, is destined to become the preferred interface for all Orange services. It will also offer a wide range of daily services thanks to partnerships with selected players. Deutsche Telekom also uses it for its own assistant, Magenta.
1.6.2. Intellectual Property and Licensing
Intellectual Property and Licensing protects, manages and adds value to Orange’s patent portfolio, which are among the Group’s intangible assets. It also adds value to software. This offers Orange a differentiating advantage over its academic and industrial partners, and also serves to defend the Group’s interests in the event of litigation.
At December 31, 2018, the Orange group had a portfolio of 6,857 patents or patent applications in France and abroad protecting its innovations. In order to maximize their value, some of these patents are licensed through patent pools for patents corresponding to industry standards (e.g. NFC, MPEG Audio, WiFi, HEVC). Value maximization also concerns software such as engineering tools for the mobile network.
In 2018, 222 new inventions were protected by patents, including major technical contributions to standardization (5G, coding, video, etc.). The Orange Labs network in France and abroad accounts for the bulk of the Group’s inventions. In 2017, Orange ranked among the top three telecoms operators who filed patents in Europe (source: European Patents Office, Top 25 applicants per leading field of technology in 2017) and among the top 15 applicants across all industries in France (source: INPI, 2017 award for leading patent applicants).
1.6.3. Open innovation
More than ever, Open Innovation is a crucial strategy for research and innovation in order to capture trends and benefit from partners’ skills, while relying on ecosystems that enable sustainable development. At Orange, this strategy is embodied by:
-the Orange Developer program, through which the Group opens its service platforms to application developers. At end-2018, Orange had a catalog of 60 self-service programing interfaces (APIs) in the areas of identification, payment, communications, IoT and data. These interfaces cover Retail services in Europe and Africa and Middle East, and Enterprises around the world;
-start-up and SME support. Orange has developed a network of 15 start-up accelerators known as Orange Fab, present in 16 countries across four continents at the end of 2018. Created in Silicon Valley in March 2013, the Orange Fab program was rolled out in France the same year, then in other countries from 2014 onwards. In 2018, this program was extended to Tunisia. Orange helps selected start-ups grow their businesses, and in certain countries provides financial and logistical support. Over 350 start-ups were or are being accelerated by Orange Fab as at end-2018;
-the alliance created in 2015 with Deutsche Telekom, Singtel and Telefónica gives selected start-ups access to the resources and markets of the four partners, thus promoting the emergence of new European and even global leaders. Known as "Go Ignite", a third edition was launched at the 2018 Mobile World Congress in Barcelona. It is designed for start-ups which are in a growth phase and have already developed marketable solutions in the following six areas: artificial intelligence (AI), cyber security, 5G, Big Data analytics, improving customer experience and the Internet of Things (IoT);
-Orange’s presence in various global networks and events, notably in the French Tech network and at Viva Technology, where Orange presented some one hundred start-ups in 2018;
-a strong involvement in the research and innovation ecosystems. Orange is a key player in collaborative research programs and contributes to over 50 national and European projects, such as the major AI4EU initiative, which brings together the biggest artificial intelligence players in Europe. Orange is also very involved in the European public-private partnership on 5G, which has 22 projects including the recent autonomous driving cross-border project (5GCroco). The Group is also working increasingly in opensource consortiums;
-the development of ecosystems of excellence in France, in which Orange is a major player through its involvement in seven competitiveness clusters (including being the chair of the Images & Réseaux cluster) within a network of more than 3,000 industrial and academic players. The Group’s investment in the development of technologies that ensure sovereignty for France and Europe is also embodied by its involvement in the Technological Research Institute b < > com which is chaired by Orange in the area of technology networks, security, hypermedia and AI;
-30 research contracts concluded with the finest university laboratories as well as two joint laboratories with Inria on the virtualization of network functions, and with the University of Nice on antennae;
-the co-funding of 13 research chairs including one with the Polytechnique and Télécom Paris Tech on the economy and regulation, and another with the Institut Mines-Télécom on personal information values and policies.
Lastly, Orange has an active policy of forming strategic partnerships with leading industrial players worldwide, which allows it to enhance its portfolio of products and services and open itself to new ecosystems.
1.6.4. Capital investment
The Orange group plays a key role in financing innovation in the IT industry, drawing on various investment vectors managed by Orange Digital Investment:
-investment vehicles that are wholly-owned by the Group, known as mono-corporate ventures, in particular Orange Digital Ventures, which are in line with Orange’s Open Innovation strategy, through which Orange acquires minority stakes in innovative start-ups, particularly in the following areas: new types of connectivity, corporate digital services (SaaS, Big Data, artificial intelligence, security, digitization of processes, etc.), Mobile Banking and mobile payment (FinTech), Internet of Things, and digital services for the Africa and Middle East region.
This approach has two objectives: one of a financial nature (to generate capital gains on disposals) and the other to gain insight into new markets, disruptive business models and agile project management. In addition, start-ups not only obtain a source of financing, but also benefit from the Group’s expertise and, where appropriate, its customer relationships (in particular B2B).
In 2018, the Group used mono-corporate venture financing to invest in five new start-ups: Morphisec (cyber security, Israel), NGD (computational storage, United States), Aire (credit scoring, United Kingdom), Africa’s Talking (communication APIs, Kenya) and Yoco (mobile point of sales, South Africa). In addition, several start-ups in the portfolio were refinanced, bringing the total amount invested in this scheme since 2015 to nearly 50 million euros for 20 start-ups;
-multi-corporate ventures (joint investment companies), in which Orange has generally invested with other investor-partners, mostly industry companies, but occasionally also involving purely financial firms. Examples include:
-the Iris Next fund and the three Orange Publicis Ventures funds (Growth, Global and Early-Stage), created within the framework of a partnership with the Publicis Group, and managed by Iris Capital Management in which the Group is also involved at the governance level,
-two funds who invest mainly in Africa: Partech Africa, managed by Partech Partners, and the Franco-African Fund, managed by AfricInvest,
-several other "thematic" funds, including Robolution Capital (focusing on robotics investments), which is managed by 360 Capital Partners, and Écomobilité Ventures (focusing on digital and sustainable mobility investments), managed by Idinvest Partners.
Orange Digital Investment also monitors more mature or late stage start-ups, which can be financed through strategic investments made directly by the Group, such as Deezer, Jumia and Soundhound.
Overall, for its private equity business, the Group’s financial investment commitments (made via direct and indirect equity investments) total more than 260 million euros over the last ten years.
1.7. Regulation of activities
1.7.1. Regulation of telecom activities
In most of the countries where it operates, the Orange group must comply with various regulatory obligations governing the provision of its products and services, primarily relating to obtaining and renewing telecommunication licenses, as well as to oversight by authorities seeking to maintain effective competition in electronic communications markets. Orange also faces specific regulatory constraints in some countries as a result of its historically dominant position in the fixed telecommunications market. The risks linked to the regulation of the electronic communications sector are described in Section 2.1.2 Legal risks.
1.7.1.1. European Union
1.7.1.1.1. Legal and regulatory framework
The European Union has laid down a common legal framework aimed at harmonizing the regulation of electronic communications. It is binding on the member states and must be implemented by the National Regulatory Authorities.
The overall legal framework of the European Union was modified by the new European Electronic Communications Code which took effect on December 20, 2018 (see Section 1.7.1.1.2 Significant events in 2018). The revised code includes four main directives deriving from the 2002 Telecoms Package on:
-a common regulatory framework for electronic communications networks and services;
-the authorization of electronic communications networks and services;
-access to and interconnection of electronic communications networks and associated facilities;
-universal service and users’ rights relating to electronic communications networks and services.
In addition, the Telecoms Package includes the directive on Privacy and electronic communications no. 2002/58/EC of July 12, 2002, concerning the processing of personal data and the protection of privacy in the electronic communications sector.
Furthermore, Regulation (EC) no. 1211/2009 of November 25, 2009, canceled and replaced by Regulation (EU) no. 2018/1971 of December 11, 2018, implemented the Body of European Regulators for Electronic Communications (BEREC).
The new regulatory framework has been fleshed out by a number of additional texts:
Analysis of relevant markets
On October 9, 2014, the European Commission adopted a new recommendation (2014/710/EC) identifying four relevant product and service markets for which National Regulatory Authorities are required to carry out market analyses potentially resulting in the implementation of ex-ante regulation, as opposed to seven in its previous recommendation of 2007:
-M 1: wholesale call termination on individual public telephone networks provided at a fixed location;
-M 2: wholesale voice call termination on individual mobile networks;
-M 3/a: wholesale local access provided at a fixed location;
-M 3/b: wholesale central access provided at a fixed location for mass-market products;
-M 4: wholesale high-quality access provided at a fixed location.
Roaming
Regulation (EU) no. 2015/2120 of November 25, 2015 (also known as the Telecoms Single Market package - TSM), which aims, in particular, to eliminate surcharges for international roaming within the European Union and Regulation (EU) no. 2017/920 of May 17, 2017, which lays down the rules for wholesale roaming markets (15):
-impose, in the context of fair usage, the alignment of international roaming retail prices with national prices for intra-European communications (voice, SMS and data) from June 15, 2017;
-expands, for customers using their cell phones outside the EU, pricing transparency requirements and bill shock prevention measures for European operators;
-grant a regulated right of access to European roaming services for MVNOs and resellers, and sets new caps on wholesale markets:
-voice: €0.032 excluding tax per minute starting on June 15, 2017,
-SMS: €0.01 excluding tax per SMS from June 15, 2017,
-data (price excluding tax):
| 04/30/16 | 06/15/17 | 01/01/18 | 01/01/19 | 01/01/20 | 01/01/21 | 01/01/22 |
| €0.05/MB | €7.7/GB | €6.0/GB | €4.5/GB | €3.5/GB | €3.0/GB | €2.5/GB |
A preparatory review, prior to the potential modification of the regulation of wholesale roaming prices is scheduled for 2019.
Suppliers of mobile services subject to the regulation on the pricing of intra-European roaming can apply a reasonable usage policy to their customers in terms of the consumption of these services in order to prevent abnormal or excessive use. Despite this option, in special and exceptional circumstances, when the supply of intra-European roaming at the national price threatens the viability of the supplier’s national pricing model, they can ask the national regulator for authorization to bill additional charges for the use of intra-European roaming, which are limited to the caps on wholesale roaming prices.
Call termination rates
On May 7, 2009, the European Commission adopted a recommendation (2009/396/EC) regulating fixed and mobile voice call termination rates in the European Union. The Commission recommends that national authorities should apply the following principles:
-symmetry in each Member State, first between the various operators’ fixed-line voice call termination rates and second between their mobile call termination rates, with the option of allowing a four-year transitional asymmetry on fixed or mobile call termination rates for any new entrants;
-call termination rates geared towards the avoidable cost of this service for an efficient operator (i.e. about 1 euro cent per minute for voice MTRs and a lower rate for voice FTRs).
> Change in Orange’s mobile voice call termination rates in Europe (in euro cents per minute)
Source: Cullen International.
Currency exchange rates at 12/31/2018 for the whole period.
> Change in Orange’s fixed voice call termination rates in Europe (in euro cents per minute)
Source: Cullen International. Figures are tariffs at local level.
Currency exchange rate at 12/31/2018 for the whole period.
In accordance with the European Electronic Communications Code, European caps on fixed voice call termination rates and on mobile call termination rates will be set by the Commission before the end of 2020.
1.7.1.1.2. Significant events in 2018
| European Electronic Communications Code |
December 2018 | Entry into effect of the European Electronic Communications Code |
| Protecting Personal Data |
May 2018 | Entry into effect of the reform on personal data protection rules |
Adoption of the new European Electronic Communications Code
The new European Electronic Communications Code was published in the Official Journal of the European Union on December 17, 2018 (EU Directive 2018/1972). It took effect on December 20, 2018. The Member States have 24 months to transpose it into national law.
The Code includes a regulatory objective intended to support the deployment and adoption of very high-connectivity networks in accordance with Orange’s request that the goals of the regulation be redirected, from the transition of monopoly to competition, to investment in telecommunication networks.
In addition, the rules governing the access obligations imposed on operators with significant market power have been adjusted in a positive way:
1) in practice, access obligations should generally be limited to fixed access infrastructure and to situations in which there are fewer than three competitors;
2) national authorities should only approve access to new fiber optic infrastructure for competitors willing to share the investment risk. Waivers to this principle will be subject to strict conditions and to a veto by the Commission;
3) obligations to provide access to fixed-access infrastructure serving subscribers, whose replicability is technically or economically inefficient, and that are symmetrically applicable to all infrastructure owners, can be imposed by the national regulator. These obligations are subject to a joint veto by the Commission and BEREC.
With respect to the allocation of the radio frequencies required for mobile services, the Code strengthens binding European rules for member states, including the minimum duration of spectrum licenses. Implementation is national, with light European oversight. Provisions facilitating the deployment of "limited range wireless access points" (defined in Article 2.23 of the Code) and the availability schedule of the 5G spectrum were also adopted.
With respect to the regulation of communication services, most of the obligations intended to protect end-users are for Internet access service and services using public numbering plan resources, independently of the service provider. Other services, such as interpersonal communication services independent of the numbering plan and signal transport services are only subject to a limited number of obligations. However, the Code reintroduces rules on competitive markets for intra-European calls and SMS by imposing a cap aligned with the caps of the 2012 Regulation, known as Roaming III (€0.19/minute and €0.06/SMS).
With respect to universal service obligations, the Code promotes the goal of supplying Internet access services which are both available and affordable but maintains the principle of the appointment of specific universal service suppliers and of a financing system provided by the industry. In addition, the Code opens the door to the extension of universal service obligations for the supply of affordable mobile services.
The Code and its associated regulation on changes in BEREC’s responsibilities and governance do not create a European regulator. However, the Code does adopt the principle of full standardization of the rights of end-users, subject to exceptions, and strengthens the control exercised by the European Commission over access regulation and over the spectrum.
Protecting Personal Data
The new General Data Protection Regulation (GDPR) came into effect on May 25, 2018. The GDPR, which replaces a 1995 European directive, is a general-purpose regulation intended for both public and private entities which harmonizes the management of personal data protection in Europe.
GDPR principles include:
-single rules directly applicable immediately in each European Union country;
-application to all Internet users and service providers of the information society intended for the European market;
-a single supervisory authority responsible for the protection of data as the interlocutor for Internet companies: that of the Union country in which they have their primary office;
-unambiguous consent which explicitly covers the processing of personal data;
-definition of a pseudonymization process whose use is encouraged;
-strengthening of the obligation to provide information to consumers;
-the introduction of a "digital right to be forgotten".
National personal data protection authorities will have enhanced powers. They will be authorized to fine companies which breach European rules up to 4% of the annual overall revenue of the companies in question. In addition, the entry into effect of the GDPR has indirect effects on the implementation of sector directive no. 2002/58/EC on privacy and electronic communications of July 12, 2002 given that it changes the meaning of the concept of consent and the penalties to which this directive refers. The Commission wants to replace the 2002 directive with a new sector regulation, but there has been no political agreement on the new text.
1.7.1.2. France
1.7.1.2.1. Legal and regulatory framework
Legal framework
The electronic communications sector is primarily governed by the French Postal and Electronic Communications Code as well as legal provisions relating to e-commerce, the information society, consumer protection and personal data protection.
France transposed the European Telecoms Package, as amended in 2009, via the order of August 24, 2011 and the decree of March 12, 2012 for the implementing regulations.
The audiovisual communication services produced or distributed by the Orange group come under the specific regulations governing this sector and are governed by law no. 86-1067 of September 30, 1986 on the Freedom of Communication.
Regulatory Authorities
The Postal and Electronic Communications Regulatory Authority (Arcep) is an independent administrative body created by the law of July 26, 1996 and acts as the French regulator for these sectors nationwide. Within the electronic communications sector, Arcep’s main missions are to define regulations for operators present in the markets in question. It has powers to sanction non-compliant operators and can rule on disputes between operators over technical and pricing conditions for network access and interconnection. Arcep also allocates spectrum and numbering resources. Finally, it determines the size of contributions to fund the universal service obligation and oversees the mechanisms for delivering this funding.
The French Competition Authority is an independent government authority responsible for ensuring open market competition and compliance with public economic policy. It has jurisdiction over all business segments, including the electronic communications sector. It has sanction powers for anti-competitive practices, as well as consultative powers. It is also responsible for overseeing mergers and acquisitions.
The ANFr (Agence nationale des fréquences - French national agency for frequencies) is responsible for planning, managing and controlling the usage of radio frequencies and for coordinating the establishment of certain radio transmission facilities. The frequency spectrum is covered by 11 controlling authorities: government departments, Arcep and the French Broadcasting Authority (CSA). Arcep and the CSA are in turn responsible for allotting to users the frequencies they control.
The CSA (Conseil Supérieur de l’Audiovisuel) is an independent administrative body created by the law of January 17, 1989. It is tasked with protecting the freedom of audiovisual communication in accordance with the law of September 30, 1986.
1.7.1.2.2. Regulation of mobile telephony
Significant events in 2018
| Spectrum |
January 2018 | Agreement on the renewal of the authorizations for the use of the 900, 1,800 and 2,100 MHz frequencies (known as the "New Deal") |
July 2018 | Inclusion of the New Deal commitments in the current authorizations of operators in the 900, 1,800,
and 2,100 MHz bands |
August 2018 | Launch of the procedure for the allocation of authorizations for the renewal of the 900, 1,800 and 2,100 MHz frequencies |
October 2018 | Arcep initiated a consultation on the allocation of new 5G frequencies in the 1.5 GHz, 3.4-3.8 GHz
and 26 GHz bands |
November 2018 | Allocation of the authorizations for the use of the frequencies within the framework of the re-allocation
of the 900, 1,800 and 2,100 MHz frequencies provided for by the New Deal |
| Others |
June 2018 | Publication by Arcep of the decision specifying the obligations for the accounting and reporting of costs charged to mobile operators (accounting separation) |
Following the work carried out by Arcep, an agreement was signed on January 14, 2018 between the French government, Arcep and the four mobile operators (Orange, SFR, Bouygues Telecom and Free Mobile) to guarantee better mobile coverage throughout the country and, in particular, in rural areas. The agreement (known as the "New Deal") is the result of negotiations carried out for the expected reallocation of authorizations to use frequencies in the 900, 1,800 and 2,100 MHz bands for 10 years. The operators committed to providing enhanced coverage starting in 2018 (see below) in exchange for the elimination of auctions and the stability of current fees.
Spectrum
> Main Orange frequency allocations in mainland France
| |
700 MHz | - Authorization granted in December 2015 for 10 MHz duplex for 20 years. These frequencies are technology neutral |
800 MHz | - Authorization granted in January 2012 for 10 MHz duplex for 20 years for the deployment of very high-speed mobile broadband (4G). These frequencies are technology neutral |
900 MHz | - Renewal in March 2006 of the 2G authorizations granted for 10 MHz duplex for 15 years. This authorization, amended in July 2018, made the frequencies technology neutral. The 8.7 MHz duplex was reallocated until March 2031 under the New Deal |
1,800 MHz | - Renewal in March 2006 of the 20 MHz duplex authorizations for 15 years. These frequencies have been technology neutral (they provide the option of operating 4G in the relevant band) since May 2016. These frequencies were re-allocated in the same quantity until 2031 as part of the New Deal |
2.1 GHz | - 3G authorization granted in August 2001 for 20 years for 14.8 MHz duplex |
| - 3G authorization granted in June 2010 for 20 years for 4.8 MHz duplex |
| - Introduction of technology neutrality, issued for Orange in September 2017 |
| - With respect to 14.8 MHz duplex, which expires in August 2021, 10 MHz duplex was reallocated until August 2031 as part of the New Deal |
2.6 GHz | - Authorization granted in October 2011 for 4G services for 20 MHz duplex for 20 years for the deployment of very high-speed mobile broadband (4G). These frequencies are technology neutral |
The New Deal
By decision of Arcep on July 3, 2018, coverage commitments under the New Deal (see below) for the period before 2021 are applicable immediately within the framework of current operator authorizations for the 900, 1,800 and 2,100 MHz bands.
The call for applications process for the allocation of frequencies in the 900, 1,800 and 2,100 MHz bands was initiated on August 2, 2018. The authorizations to use the relevant frequencies were adopted by Arcep on November 15, 2018. These authorizations will take effect for Orange from 2021.
5G bands (3.4-3.8 GHz, 26 GHz and 1.4 GHz)
The Government and Arcep provided information about the road map for 5G in France on July 16, 2018.
Three bands are considered at this point: the 3.4-3.8 GHz, the 26 GHz and the 1.4 GHz bands for allocation at the end of 2019 or in early 2020. A first consultation was launched on October 26, 2018 on the allocation of new frequencies for 5G in these three bands. A second consultation on the allocation procedure has been announced for April 2019.
Mobile coverage
The New Deal agreement
Under the New Deal, operators committed to:
-accelerating the pace of targeted programs to improve coverage and, within this context, for each one to cover at least 5,000 new areas throughout the country (most of which will be shared by the operators) replacing existing programs (the "town center dead zones" program, the "800 strategic sites" program and the "France Mobile" program) for which the operators will now be fully responsible;
-generalizing 4G reception by equipping all of their mobile sites with 4G by the end of 2020, 75% of the "town center dead zones" program sites by the end of 2020 and 100% by the end of 2022;
-accelerating the coverage of transport routes, ensuring that the main road and rail routes have 4G coverage. The agreement includes provisions for the coverage of regional trains;
-generalizing coverage within buildings, in two parts: gradual availability of voice and SMS services via Wi-Fi with the goal of enabling 80% of our customers with a compatible handset to benefit from these services by the end of 2019, and the marketing of an offering enabling public companies and individuals who so request to obtain improved indoor multi-operator coverage of their buildings at a reasonable rate;
-improving reception quality throughout the country, and particularly in rural areas. The new performance standard applied to operator obligations will be that of "good coverage" defined as the "ability to be able to call and exchange SMS outside of buildings in most cases and within buildings in some cases".
Obligations to deploy and provide 4G coverage in metropolitan areas including that resulting from the "New Deal"
(as a % of the population) | Jan-17 | Oct-19 | Dec-20 | Jan-22 | Dec-22 | Oct-23 | Jan-24 | Dec-25 | Jan-27 | End-2030 |
Regional rail network (coverage inside trains
in each region as a % of track) | | | | | | | | | 60% | 80% |
Regional rail network (national coverage inside
trains as a % of track) | | | | 60% | | | | | 80% | 90% |
Regional rail network (national coverage alongside
tracks as a % of track) | | | | | | | | 90% | | |
Priority highways (as a % of outside areas) | | | 100% | | | | | | | |
Priority highways (as a % of areas from inside vehicles) | | | | 100% | | | | | | |
Town centers of the dead zone program (1) | | | 75% | | 100% | | | | | |
In the priority deployment area (2) with very high-speed broadband (3) | 40% (800 MHz) | | | 90% (800 MHz) 50% (700 MHz) | | | | | 92% (700 MHz) | 97.70% (700 MHz) |
In each county (département) | | | | | | | 90% | | 95% | |
Throughout the metropolitan territory | | 60% | | | | 75% | | | 98% | 99.60% |
(1) 1% of the population and 3,300 town centers.
(2) 18% of the population, 63% of the country.
(3) An operator has met their obligation to provide very high-speed broadband when the equipment deployed enables a theoretical peak speed of 60 Mbps.
Operators have an obligation to provide mobile radiotelephony service under the "good coverage" conditions required by Arcep to 99.6% of the population by March 2024 at the latest, and to 99.8% in March 2028. They must also provide very high-speed broadband access from all Orange network sites with more than 5W by the end of 2020 (excluding the town center dead zones program sites which have a target of 75% by the end of 2020 and 100% by the end of 2022).
At end-December 2018, Orange’s 4G coverage was 98.6% of the population and 87.1% of the country.
Infrastructure sharing
The New Deal agreement contains clauses on network sharing. In addition to active sharing, which is required for the four operators on all sites that host them as part of the provisions for targeted coverage, operators are subject to an overall obligation to accede to the requests of the other operators to ensure ex-ante passive sharing in the priority deployment zone. However, the agreement states that this obligation can be waived if an access offering deemed satisfactory by Arcep is available for a sufficient number of sites and at a reasonable rate.
Orange’s obligations regarding cost accounting and accounting separation for the mobile business
On June 19, 2018, Arcep published decision no. 2018-0685 specifying obligations for accounting for and the reporting of costs imposed on mobile operators. The decision supersedes decision no. 2013-0520. As was the case for the previous decision, it applies to Orange, SFR, Bouygues Telecom, Free Mobile, SRR and Orange Caraïbes. The new decision primarily simplifies operator obligations.
Analysis of the wholesale mobile call termination markets
The fixed and mobile termination markets are regulated by Arcep decision no. 2017-1453 for the 2017-2020 cycle. The decision confirms the cost-orientation obligation for call termination rates. The cap levels for call termination were eliminated in the final decision. Mobile operators, including Orange, have left their rates unchanged since 2017.
1.7.1.2.3. Regulation of fixed-line telephony, broadband and very high-speed broadband Internet
Significant events in 2018
| Deployment of fiber optic networks |
May 2018 | - Arcep decision on the resolution of the dispute between Free and Orange on the conditions of the FTTH contract for less densely inhabited areas |
July 2018 | - Arcep adoption of a recommendation on the consistency of FTTH network deployment |
August 2018 | - Government approval of Orange’s proposed commitments for FTTH deployment, taken under Article L. 33-13 of the French Postal and Electronic Communications Code |
December 2018 | - Arcep decision on the resolution of the dispute between Coriolis, THD Bretagne and Megalis regarding an FTTH bitstream offer request on the public initiative network of the Brittany region operated by THD Bretagne |
December 2018 | - Arcep decision no. 2018-1597-RDPI giving notice to Orange to comply with the completeness of certain FTTH sharing points outside of very densely inhabited areas |
| Analysis of the broadband and very high-speed broadband markets |
March 2018 | - Publication of 2018 rates for wholesale high-quality copper access |
July 2018 | - Launch of resale offers for retail fiber pro offers (market analysis 3a obligation) and passive FTTH offers (Optimum Access and Optimum PM) |
November 2018 | - Launch of the activated FTTH offering (Optimum Ethernet Enterprises and Optimum Ethernet Lan) |
December 2018 | - Decision no. 2018-1523 of December 5, 2018 on the pricing framework for wholesale telephone service access (VGAST) rates and related call origination for non-residential access for 2019-2020 |
| Interconnection |
April 2018 | - Arcep decision on the resolution of the dispute between Free SAS, Free Mobile and Orange on VoIP interconnection |
| Others |
October 2018 | - Arcep decision no. 2018-1276-RDPI notifying Orange that it must comply with its quality of service obligation required in the decree of November 27, 2017 on the appointment of the operator responsible for providing the "connection" and "telephone" services component of the universal service |
December 2018 | - Arcep decision no. 2018-1596-RDPI giving notice to Orange to comply with the quality of service of wholesale offerings for the mass and corporate markets |
The ex-ante asymmetric regulation which Orange’s fixed services are subject to relates solely to wholesale offers ensuring effective competition in retail markets (call origination and termination, wholesale line rental, unbundling, access to the civil engineering infrastructure, bitstream, passive access to the final segments of the FTTH network and capacity services).
Arcep decision on the resolution of the dispute between Free and Orange on the conditions of the FTTH contract in less densely inhabited areas
At the end of 2017, Free requested Arcep to rule on a dispute with Orange about the conditions for co-financed access to the Orange FTTH network in less densely inhabited areas.
In its decision of May 17, 2018, Arcep agreed to the following demands from Free:
-Orange must offer Free Medium Dense Area (MDA) access to the FTTH network for a set period of at least 40 years subject to Orange’s decision to continue the technical and commercial operation of the FTTH network;
-the contract must define the relation between the main rates and the costs of the co-financed network and must provide for Orange to send Free a report on expenses presenting capital expenditures and operating expenses separately. This issue was submitted to the Paris Court of Appeal;
-the contract must detail the technical and rate conditions for access to the supernumerary fibers of the network co-financed by Free for the connection of Free Mobile’s BTS.
Publication of enhanced coverage maps
On February 22, 2018, Arcep passed decision no. 2018-0169 on the content and publication procedures for network coverage and fixed-location Internet access services maps and on the methods for the transmission of underlying information. This decision compels operators to (i) publish coverage maps for fixed services, by speed and by technology, with information available at the level of each building, (ii) transmit the coverage maps to Arcep, and (iii) provide Arcep with the underlying network data used to establish the coverage maps.
Regulation of fixed-line electronic communications service offers: changes in the rates of wholesale offers subject to cost orientation
On December 21, 2017, Arcep passed a decision on the rate framework for the full unbundling of the local copper loop for 2018 to 2020. The decision sets a cap on the recurring monthly access rate for full unbundling and for the monthly recurring rate for naked bitstream access for the next three years:
| | 2017 rates | 2018 rates framework | 2019 rates framework | 2020 rates framework |
Unbundling | Total | 9.45 € | 9.31 € | 9.41 € | 9.51 € |
Bitstream | Naked DSL access | 12.93 € | 13.19 € | 13.30 € | 13.41 € |
In accordance with Arcep decision, the changes planned for the full unbundling rates and for naked ADSL for 2019 were adjusted to take into account the changes to the Imposition Forfaitaire sur les Entreprises de Réseau (IFER) (flat-rate tax on network businesses). The tax, which was only for copper lines, was broadened to include cabled networks and FTTH. Lines built fewer than five years ago are exempted. In accordance with the principle of non-discrimination, part of the decrease in the tax paid by Orange is passed on to the alternative operators via a reduction in wholesale rates.
Based on the new IFER value, which was definitively passed at the end of December 2018, rates for 2019 will be, respectively, 9.27 euros/month for full unbundling and 13.16 euros/month for naked DSL access.
Regulation of fiber optic networks
Regulatory framework governing very high-speed broadband wholesale offers
The current regulatory framework for the deployment of very high-speed broadband in France confirms the principle of symmetric regulation for the terminating segment of networks, and encourages sharing by operators, with potential co-financing following prior consultation with the municipality:
-no ex-ante regulation of retail prices;
-asymmetric regulation of access to civil engineering infrastructure which allows alternative operators to deploy their horizontal networks on Orange’s infrastructure: non-discriminatory access at a rate that reflects costs;
-principle of sharing the terminating segment of networks between operators;
-no obligation for asymmetric access (unbundling or bitstream) for fiber, confirmed by the 3a and 3b market analysis decisions published by Arcep on December 14, 2017;
-symmetric regulation for access to the terminating segment of networks, including outside of very densely populated areas: same obligation to provide passive access to the terminating segment of FTTH networks under reasonable and non-discriminatory conditions, applicable to all operators equipping buildings with fiber optic in the entire French territory. Access must be from a reasonably situated shared access point (Arcep decision no. 2009-1106 supplemented by Arcep decision no. 2010-1312 for less densely populated areas). Rates must comply with the principles of efficiency, relevance, auditability and non-discrimination.
Arcep is of the opinion that the FTTH regulatory framework it decided on complies with the principles defined by the European Commission in its NGA (16) recommendation, applicable to broadband and very high-speed networks, published on September 20, 2010. It recommends asymmetric regulation requiring that operators in a dominant position provide access to the terminating segment of very high-speed lines and access from OCNs (17) while conceding a risk premium to operators who invest and an adaptation principle for national circumstances. The European Commission approved Arcep’s position.
Orange’s "L. 33-13" deployment commitments
In early 2018, Orange formalized its commitment proposals for FTTH deployment under Article L. 33-13 of the French Postal and Electronic Communications Code, confirming its prior commitments taken under the AMII (18), in 2011, then in 2013 and 2015.
Orange proposed that it commit to ensuring that, within its FTTH deployment scope in the AMII area: (i) by the end of 2020, 100% of homes and professional premises would have access to FTTH sales offers (including a maximum 8% of premises connectable on demand, excluding refusals by third parties), and (ii) by the end of 2022, 100% of homes and professional premises would be made connectable (excluding refusals by third parties).
These commitment proposals took into account the agreement reached at the end of May 2018 by Orange and SFR which led to Orange withdrawing from 236 municipalities to SFR’s benefit.
Following Arcep opinion of June 12, 2018, Orange’s commitment proposals (and those of SFR) were accepted by the French government on July 26, 2018 (19).
Completeness of FTTH networks
Arcep notified Orange that it must comply with the obligation for completeness of a list of 460 shared access points (as listed in the appendix of its decision no. 2018-1597 - RDPI), at the latest by December 31, 2019.
Orange is required to prove its compliance with the obligation for completeness of the 460 shared access points by January 31, 2020, at the latest, or to explain the difficulties encountered. Arcep stated in this respect that, "if Orange were to report exceptional difficulties which prevent it from making certain premises connectable, Orange should submit all appropriate supporting evidence demonstrating that it had implemented the resources required to resolve the issues, but that they persisted".
Arcep decision on the resolution of the dispute between Coriolis, THD Bretagne, an Orange subsidiary, and Megalis regarding a FTTH bitstream offer on the public initiative network in the Brittany region operated by THD Bretagne
In its decision of December 11, 2018, Arcep ordered THD Bretagne, the Orange subsidiary responsible for the operation of the Megalis public initiative network in Brittany, to provide Coriolis Telecom, within four months, "with an offer for activated wholesale access to very high-speed fiber optic lines enabling it to serve an end-user it operates,
stating the technical and rate conditions and providing for activation of the lines within nine months maximum, as of the signature of the offer by Coriolis" (Article 1). Arcep did not issue a statement on the technical and rate conditions of the offer and sent the parties back to negotiations.
Analysis of the relevant markets
Broadband and very high-speed broadband markets
On December 14, 2017, Arcep published the following decisions resulting from the fifth analysis cycle of the fixed broadband and very high-speed broadband markets for the period from December 2017 to December 2020:
-decision no. 2017-1347 for market 3a (wholesale local access provided at a fixed location): unbundling on the copper local loop, access to civil engineering infrastructure, passive access to the local FTTH loop or bitstream with delivery to the optical connection node, passive FTTH offer with quality of service;
-decision no. 2017-1348 for market 3b (market for wholesale central access provided at a fixed location for mass-market products): regional copper bitstream or FTTH;
-decision no. 2017-1349 for market 4 (high-quality wholesale access): LPT, SDSL, FTTO and FTTE wholesale offers;
-Arcep decision no. 2017-1488 of December 14, 2017 setting the financial conditions for access to the civil engineering infrastructure of the Orange local loop which confirmed most of the rules previously decided in 2010.
These decisions extend virtually all of the obligations previously imposed on Orange, which remains the only dominant player in the various markets.
In the general market, Arcep only preserved the symmetrical framework for FTTH, and does not impose an obligation of equivalence of inputs on Orange. Orange committed to (i) upgrading information systems by September 1, 2018 for the eligibility processes and by December 31, 2018 for order processes, (ii) providing Arcep with commercial contacts for optical connection nodes/shared points in very densely inhabited areas, and (iii) reducing cases of proven difficulty in connecting third party operators to Orange’s shared access points in buildings by mid-2019.
In the Enterprise market, Orange saw its obligations in the wholesale market increased by the introduction of new remedies:
-the obligation to provide an enhanced quality of service option on its FTTH infrastructure;
-the obligation to provide a wholesale offer for passive access to the local shared optical loop suited to new infrastructure players dedicated to the intermediary market for activated access offers for companies;
-the obligation to provide a resale offer for its retail offers for the enterprise market (FTTH Pro).
Fixed-line telephony
As part of its fifth round of analysis of the relevant fixed-line markets for non-residential customers for the 2018-2020 period, on December 21, 2017, Arcep adopted decision no. 2017-1568, which restricts the obligation to formalize a wholesale offer for access to telephone service to the non-residential market only.
Wholesale non-residential line rental rates are now governed by decision no. 2018-1523 of December 5, 2018. Contract caps are stable for 2019 and 2020 compared to previous caps (12.32 euro cents/month for analog and 18.57 euro cents/month for digital). The cap for call origination collected at the Operator Connection Point associated with the contracts is 0.6584 euros/minute in 2019 and will be 0.6958 euros/minute in 2020.
Fixed-line voice call termination
Following its decision no. 2017-1453 of December 2017, Arcep removed the rate caps for the 2018-2020 period. Rates must be based on costs.
Orange interconnection with Free and Free Mobile
The dispute was settled on April 12, 2018 with Orange winning five of the seven primarily technical points related to VoIP interconnection to the Free networks.
Universal telephony service
The order published on November 27, 2017 designates Orange as the provider of the universal service fixed telephony component for the "connection" and "telephone service" services for a period of three years, during which time the end of PSTN accesses will be effective. This designation incorporates new quality of service monitoring indicators.
Moreover, by its decision no. 2018-0401 of April 24, 2018, Arcep set the rules used for the calculation of the net cost of the universal service and operator contributions for 2016.
Following the opening of a penalty procedure (L. 36.11 of the French Postal and Electronic Communications Code) by Arcep in June 2018, Orange was given notice in October 2018 regarding its compliance with universal service quality of service obligations. Arcep set intermediate obligations for the months of November and December 2018 and for each quarter of 2019.
Quality of service of wholesale offers for the mass and corporate markets
Following the opening of a penalty procedure (Article L. 36.11 of the French Postal and Electronic Communications Code) by Arcep in September 2018, Orange was given notice in December 2018 by which Arcep required Orange to comply, starting in the first quarter of 2019, with indicators relating to production and after-sales service processes for all of the following offers:
-mass market: unbundling, offers activated without a guarantee for reinstatement time (DSL access);
-corporate market: LPT, copper access (DSLE, C2E, CELAN), Optical access (CE2O, C2E, CELAN).
1.7.1.3. Spain
1.7.1.3.1. Legal and regulatory framework
The 2009 Telecom Package was implemented into Spanish law by Royal Decree no. 726/2011 on universal service provision in May 2011 and Royal Decree no. 13/2012 of March 31, 2012.
The telecommunications sector is also covered by law no. 15/2007 of July 3, 2007 relating to the implementation of competition rules.
The National Commission for Markets and Competition (CNMC), established by law no. 3/2013 of June 4, 2013, brings together regulatory authorities from different economic sectors, including telecommunications, and the antitrust authority.
Since November 4, 2016, the Ministry for Energy, Tourism and the Digital Agenda (MINETAD) has been responsible for managing authorizations, spectrum allocations, telephone numbering, universal service cost approvals, quality of service, and disputes between consumers and non-dominant operators.
1.7.1.3.2. Regulation of mobile telephony
Mobile voice call termination rates
As part of its fourth round of mobile termination market analysis (Market 2/2014), the CNMC adopted decision no. 002/17/m2-2014 on January 18, 2018, which gradually reduces mobile call termination rates from 1.09 euro cent/minute to 0.64 euro cent/minute in January 2020. These prices apply only to traffic coming from the European Economic Area.
The caps decided on are:
(in euro cents/minute) | through 01/30/2018 | 01/31/2018- 12/31/2018 | 01/01/2019- 12/31/2019 | As of 01/01/2020 |
MNO, Full MVNO | 1.09 | 0.70 | 0.67 | 0.64 |
Spectrum
In May 2018, the MINETAD launched the 200 MHz auction procedure for the 3.6-3.8 GHz frequency band: the auction ended on July 26, 2018. Orange acquired a block of 60 MHz for 20 years for 132 million euros.
> Summary of national frequencies allocated to Orange and their expiration year
| 800 MHz | 900 MHz | 1,800 MHz | 2.1 GHz | 2.6 GHz | 3.5 GHz |
| 10 MHz duplex (2031) | 10 MHz duplex (2030) | 20 MHz duplex (2030) | 15 MHz duplex + 5 MHz (2020) | 20 MHz duplex (2030) | 20 MHz duplex (2030) 60 MHz (2038) |
Internal source.
Mobile coverage
All operators holding 4G frequencies in the 800 MHz band must provide speeds of at least 30 Mbit/s by January 1, 2020. This obligation will benefit 90% of the population in municipalities with fewer than 5,000 residents. The regulator also proposed including an obligation to share infrastructure under non-discriminatory conditions and at reasonable prices.
Fourth round of market analysis of the mobile call termination market (market 2/2014)
The CNMC, by its decision 002/17/m2-2014 dated January 18, 2018, set caps for traffic from the European Economic Area corresponding to its long-run incremental cost model for an efficient generic operator in line with the European recommendation. It also introduced new rules on transparency: the notification to the CNMC of all interconnection agreements concluded between operators, including for companies within the same group, as well as the notification of mobile termination agreements outside the European Economic Area when rates differ from those applied in Spain.
5G plan (3.5 GHz and 700 MHz bands)
The Ministry for the Economy approved the road map for the "second dividend" on July 2, 2018. Following the release of the 700 MHz band for electronic communications, the migration of the 700 MHz band TNT to the 470-694 MHz band will end in March 2020, three months before the deadline set by the European Union at June 30, 2020.
1.7.1.3.3. Regulation of fixed-line telephony, broadband and very high-speed broadband Internet
Wholesale broadband access market: third round of 3a and 3b/2014 and 4/2014 market analysis
The CNMC adopted its third round of the analysis of markets 3a and 3b/2014 and 4/2014 on February 25, 2016, by which it decided:
-for market 3a:
-to retain the copper network unbundling obligations introduced in the previous 2009 market analysis and to retain access to Telefónica civil engineering infrastructure,
-to not impose ex ante asymmetrical obligations on Telefónica for the fiber network in 66 cities considered effectively competitive, representing 35% of the Spanish population, given that a Virtual Unbundled Local Access (VULA) offer must be made available for the rest of Spain;
-for market 3b:
-to progressively lift the ex ante regulatory obligations in that part of Spain deemed competitive, and covering 58% of the existing broadband lines; and in the rest of Spain deemed non-competitive, to maintain an access obligation to Telefónica’s network, with the NEBA-copper offer, without limitation on bandwidth, and charged on a cost basis,
-in the area declared competitive for new-generation networks (NGA), corresponding to 66 municipalities (approximately one-third of the population), to lift the obligation to provide a fiber bitstream offer (known as the NEBA offer) from September 2016,
-in the zone declared non-competitive for NGAs, but deemed competitive for copper (approximately one-third of the population), to impose a NEBA Fiber offer at rates meeting the economic replicability test until March 2018,
-in the remaining area declared non-competitive, including for copper, to impose a NEBA Fiber offer at rates that satisfy the economic replicability test with no time limit;
-and for market 4:
-to retain, throughout Spain, the NEBA-business offer obligation, charged based on cost for copper and meeting the economic replicability test for fiber.
Revision of the NEBA reference offers (bitstream)
On March 19, 2018, the CNMC approved the "replicability test" (ERT) for Telefónica’s offers, which enables the setting of the wholesale price of fiber. The monthly fee for the local NEBA offering (local activated offer) and for access to NEBA fiber (activated offer) were set at 17.57 euros by Telefónica. The regulator confirmed with the ERT test that the wholesale prices for Telefónica’s NEBA-local and NEBA-fiber fiber optic offerings enable alternative operators to reproduce the main fiber optic products offered by the incumbent operator.
1.7.1.4. Poland
1.7.1.4.1. Legal and regulatory framework
Orange’s businesses are governed by the law of July 16, 2004 on telecommunications, transposing the 2002 European Telecom Package concerning electronic communications into Polish law, and by the law of February 16, 2007 concerning competition and consumer protection. The law of December 2012, transposing EU directives issued in 2009, came into force on January 21, 2013. The law of May 7, 2010, on developing telecommunication networks and services, provides access to telecommunications and other technical infrastructures funded by public funds.
The Ministry of Digitization, created in November 2015, is responsible for telecommunications.
The Office of Electronic Communications (UKE) is responsible, in particular, for telecommunications regulation and frequency management, as well as certain functions related to broadcasting services.
The Office of Competition and Consumer Protection (UOKiK) is responsible for the application of competition law, merger control and consumer protection.
Digital Poland
On September 11, 2018, the Ministry for Digital Affairs launched a public consultation on updating the national very high-speed broadband plan. The result of the consultation will be published in 2019.
1.7.1.4.2. Regulation of mobile telephony
Mobile call termination rates
Since July 1, 2013, the symmetric mobile voice call terminations of all operators cost 0.0429 zloty/minute, (1.00 euro cent/minute on December 31, 2018). In accordance with the recommendations of the European Commission, this rate is based on pure long-term incremental costs. It can only be changed based on the evolution of the differential costs of a efficient operator.
Spectrum
> Summary of frequencies allocated to Orange and their expiration year
| 800 MHz | 900 MHz | 1,800 MHz | 2.1 GHz | 2.6 GHz |
| 10 MHz duplex (2030) | 7 MHz duplex (2029) | 10 MHz duplex (2027) | 15 MHz duplex + 5 MHz (2022) | 15 MHz duplex (2030) |
Internal source.
Following the political agreement between the Council and the European Parliament reached in the presence of the Commission on December 14, 2016, the 700 MHz spectrum band should be dedicated to mobile networks in all member states from 2020. UKE has initiated a coordination process with neighboring countries.
Infrastructure sharing
The network sharing agreement between Orange and T-Mobile Polska, from 2011, was extended to LTE in December 2016. On May 22, 2018, Orange and T-Mobile decided to put an end to frequency spectrum sharing in the 900 MHz and 1,800 MHz bands.
Application of Roaming Like at Home regulation
In order to handle a massive increase in the volume of traffic in certain customer categories, Orange submitted an exemption request file to the regulator UKE at the end of 2017, as authorized by the regulation, to bill its roaming customers a surcharge. By the decision of April 16, 2018, the regulator authorized the exemption for one year. Orange decided to implement the surcharges on voice and data for its p-paid services, starting on June 18. However, the surcharge was not applied to customers with a contract. The authorized surcharges are:
-outgoing call: 0.0407 zloty/minute;
-incoming call: 0.0163 zloty/minute;
-SMS: 0.0081 zloty;
-MMS/1MB: 0.0060 zloty.
5G
As part of the "5G for Poland" project, the Ministry of Digitalization, UKE and mobile operators have concluded a multilateral agreement to assess the availability of spectrum in the main frequency bands (700 MHz, 3.4-3.8 GHz and 2.6 GHz).
Parliament adopted amendments to the Telecommunications Act allowing operators to use these frequency bands free of charge for the testing of new technologies or for the reallocation of frequencies. Twenty cities were selected for 5G tests. Orange is currently testing in three cities (Krakow, Gliwice and Warsaw).
1.7.1.4.3. Regulation of fixed-line telephony, broadband and very high-speed broadband Internet
The ex-ante regulation of Orange’s fixed services, for the areas defined as non-competitive, relates solely to wholesale offers.
Deregulation of markets 1 and 3/2003
On June 26, 2018, the European Union approved the decisions to deregulate markets 1 & 3/2003 (access to the public telephone network at a fixed location for residential and non-residential customers). The deregulation decision provides for a transition period of two years corresponding to the maximum duration of the contracts agreed by the operators and their private customers.
Analysis of the wholesale broadband access market (market 5/2007)
On October 7, 2014, the UKE made a decision on the wholesale broadband access market (third market analysis cycle) which excludes 76 municipalities in Poland from ex-ante regulation. The portion of the decision providing for a deregulated area was canceled by the Warsaw Court of Appeal for procedural defects on February 14, 2018. Orange nevertheless offers its wholesale services on a commercial basis in these deregulated areas.
Everywhere else, Orange’s obligations are maintained (on access, non-discrimination, transparency, accounting separation and cost-based pricing). Another market analysis is planned for 2019 and a first consultation was initiated by the UKE on January 11, 2019.
Analysis of the wholesale fixed broadband access market (market 4/2007)
In its June 2, 2014 decisions as part of the second round of market analysis on copper and fiber, the UKE maintained Orange’s obligations in Poland (access, non-discrimination, transparency, accounting separation and cost-based pricing). Another market analysis is planned for 2019 and a first consultation was initiated by the UKE on January 11, 2019.
Reference offer for fixed-line markets
The reference offer applies to all wholesale fixed services: call origination and termination, wholesale line rental, partial and full unbundling and bitstream access.
On September 4, 2018, the European Commission accepted, without comment, the changes made to the Orange reference offer intended to lower subscription fees for the fixed-access wholesale service and eliminate number portability fees.
Fixed-line call termination rates
On May 30, 2018, the UKE launched a public consultation on the reduction of fixed-line call termination rates for 75 operators. According to the proposed drafts, the rate applicable to Orange would be reduced from 0.013 zloty/minute (average effective rate) to 0.0032 zloty/minute. Based on the results of the public consultations and of discussions with the European Union, the UKE renewed the public consultation on December 19, 2018.
1.7.1.5. Other EU countries where the Orange group operates
1.7.1.5.1. Belgium
Mobile voice call terminations
In its decision of May 26, 2017, the Belgian Institute for Postal Services and Telecommunications (BIPT) set the Orange mobile call termination rate at 0.99 euro cent/minute based on the long-term incremental cost model of an efficient generic operator.
Spectrum
> Summary of frequencies allocated to Orange and their expiration year
| 800 MHz | 900 MHz | 1,800 MHz | 2.1 GHz | 2.6 GHz |
| 10 MHz duplex (2033) | 12 MHz duplex (2021) | 25 MHz duplex (2021) | 15 MHz duplex + 5 MHz (2021) | 20 MHz duplex (2027) |
Internal source.
Renewal of the frequency allocations and reservation of frequencies for a fourth operator
The federal government approved the draft royal decrees for the 700 MHz, 1,500 MHz and 3,600 MHz bands on July 26, 2018. The exact procedure for allocating the bands will be set by future royal decrees. The ministry announced its intention to reserve frequencies for a fourth mobile network operator. The BIPT published a report on the impact of such a change on the mobile telephony market on June 26, 2018. The Council of Ministers approved the royal decrees for licenses at the end of July to prepare for the auctioning of the spectrum in the second half of 2019. In September 2018, the BIPT published a consultation on the 1,400 MHz frequency schedule and the auction process. Given the political changes which occurred at the end of 2018, the date on which the government will finalize the auction framework is uncertain. In addition, the BIPT published the "national road map" for the 700 MHz band on October 25, 2018 in application of the European regulation of 2017 on the use of the 470-790 MHz frequency band in the European Union.
Cable wholesale broadband markets
A consultation on the review of the markets was initiated by the Conference of Regulators of the electronic communications sector in July 2017. The review concluded that there were different wholesale markets for central access (copper/fiber versus cable) and for television (IP-TV versus cable). On May 25, 2018, the European Commission commented on the draft decisions for the wholesale broadband
markets (markets 3a and 3b/2014) and on the wholesale television distribution market. The European Commission did not block the proposal to define two central access wholesale markets for the copper and fiber optic networks and for coaxial cable, despite its comments on the measure. In light of this, the final decision of the Conference of Regulators of the electronic communications sector was approved on June 29, 2018.
In the meantime, Telenet submitted an appeal of the European Commission’s observation letter on the market analysis to the Court of Justice of the European Communities (CJEC). In parallel, the cable operators (Telenet, Brutélé and Nethys) submitted appeals of the decisions regarding the market analysis to the National Court of Appeal. The schedule of proceedings has not yet been set.
1.7.1.5.2. Romania
Mobile voice call terminations
The mobile call termination rate has been 0.96 euro cent/minute since April 1, 2014. Following a public consultation closed on July 2017, the regulatory authority (Ancom) decided to maintain the 2014 rates. However, after an in-depth inquiry by the European Commission, the Ancom decided to lower fixed-line call termination rates to 0.84 euro cent/minute as of May 1, 2018.
Spectrum
> Summary of frequencies allocated to Orange and their expiration year
| 800 MHz | 900 MHz | 1,800 MHz | 2.1 GHz | 2.6 GHz | 3.4 GHz- 3.8 GHz |
| 10 MHz duplex (2029) | 10 MHz duplex (2029) | 20 MHz duplex (2029) | 15 MHz duplex +5 MHz (2020) | 20 MHz duplex (2029) | 25 MHz duplex +10 MHz duplex +45 MHz (2025) |
Internal source.
On May 22, 2018, the Ancom announced that the auction for the 5G spectrum (including the 700 MHz band) would be delayed until the end of 2019.
Orange won additional frequencies on August 14, 2018 at a private auction organized by 2K Telecom for the allocation of 2x10 MHz blocks in the 3.5 GHz band, valid until 2025, for 3.35 million euros.
In December 2018, the Romanian government approved measures impacting several industries, including telecommunications, via extraordinary order 114/2018. The order includes:
-for new licenses: a reserve price of 2% or 4% of industry revenue depending on the frequency, multiplied by the number of years of validity of the frequency;
-for license renewals: a regulatory fee of 4% of industry revenue multiplied by the remaining number of years of validity of the frequency.
In addition, the same order provides for an increase in the contribution of telecommunication operators to the cost of Ancom operations of up to 3% of revenue, and a fine of up to 10% of revenue in the event that infrastructure is deployed without the required authorization.
Wholesale broadband markets
In the context of its second round of analysis of the 3a and 3b markets, completed in November 2015, Ancom considered the retail broadband market to be effectively competitive and that, as a consequence, no obligation should be imposed on the two wholesale markets.
1.7.1.5.3. Slovakia
Mobile voice call terminations
On July 29, 2013, the regulatory authority RU issued a decision on the call termination rates of the three mobile operators, and capped them at 1.226 euro cent/minute.
As part of its fourth round of market analysis, the RU submitted its draft decision setting mobile termination rates at 0.749 euro cent/minute for all operators to the European Commission on November 18, 2016. On December 15, 2016, the European Commission had not commented on the market analysis.
After review of its cost model, the RU submitted a new draft decision to the European Commission on September 30, 2017. The draft decision introduced an asymmetry of terminations in favor of the fourth operator, Swan. It set rates applicable from January 1, 2018 for mobile terminations at 0.825 euro cent/minute for operators, except for Swan, whose rate would be 0.608 eurocent/minute. The regulator also proposed an unprecedented increase in the formula for calculating termination rates based on the size of the business. Following an in-depth investigation (phase 2) by the European Commission, backed up by an unfavorable opinion issued by BEREC on the tariff asymmetry potentially benefiting Swan, the Slovakian regulator had to amend its draft decision.
Spectrum
> Summary of frequencies allocated to Orange and their expiration year
| 800 MHz | 900 MHz | 1,800 MHz | 2.1 GHz | 2.6 GHz | 3.4 GHz- 3.8 GHz |
| 10 MHz duplex (2028) | 10 MHz duplex (2021) | 15 MHz duplex (2021) +5 MHz duplex (2026) | 20 MHz duplex +5 MHz (2026) | 30 MHz duplex (2028) | - |
Internal source.
Wholesale broadband and very high-speed fixed broadband markets
The Slovakian regulator completed its third round of analysis of the 3a, 3b and 4/2014 markets and published its decisions on markets 3a and 3b on January 19, 2018, and on market 4 on November 7, 2016. The regulator eased regulation:
-in market 3a, by excluding unbundling of the local sub-loop, while maintaining unbundling in the local copper loop, and by limiting the regulatory obligations of NGA offers to the economic replicability test and to a technical equivalence of inputs;
-in market 3b, by imposing a replicability test of 2P offers and multicast IPTV wholesale access offers, instead of regulated prices;
-in market 4, by eliminating the sector-based regulatory obligations, because of the competitive nature of the market.
The RU published rate caps for access to fixed physical infrastructure (civil engineering) on October 17, 2018. Maximum monthly fees are as follows: access to ducts (0.257 euro/month/meter), HDPE tube (0.128 euro/month/meter) and micro-tube (0.116 euro/month/meter). This is a significant decrease in the access rates for the infrastructure.
1.7.1.6. Non-EU countries where the Orange group operates
The table below shows the type of licenses held by Orange and their expiration dates as of December 31, 2018 in each country of the Africa and Middle East region in which it is present:
Renewal of licenses in the MEA region
| Expiration date of the current license | License Type |
Botswana | April 2022 | 2G - 3G |
Botswana | August 2025 | 4G |
Burkina Faso | April 2020 | 2G |
Burkina Faso | September 2022 | 3G |
Cameroon | January 2030 | 2G - 3G - 4G |
Côte d’Ivoire | April 2032 | Global (1) |
Egypt | October 2031 | 2G-3G-4G & Fixed virtual license |
Guinea-Bissau | April 2025 | 2G-3G-4G |
Guinea | January 2022 | 2G and 3G |
Jordan | May 2019 | 2G - 3G |
Jordan | September 2030 | 4G |
Jordan | May 2024 | Fixed |
Liberia | July 2030 | Global (2G - 3G - 4G) |
Madagascar | April 2025 | 2G - 3G - 4G |
Mali | July 2032 | Global (2G - 3G - 4G) |
Morocco | August 2024 | 2G |
Morocco | December 2031 | 3G |
Morocco | April 2035 | 4G |
Morocco | April 2036 | Fixed |
Mauritius | November 2021 | 2G - 3G - 4G |
Mauritius | November 2025 | Fixed |
Niger | December 2022 | 2G - 3G |
Central African Republic | May 2027 | Global (1) (2G - 3G) |
Democratic Republic of the Congo | October 2031 | 2G - 3G |
Democratic Republic of the Congo | May 2038 | 4G |
Senegal | August 2034 | Global (1) (2G-3G-4G and fixed) |
Sierra Leone | July 2031 | 2G - 3G |
Tunisia | July 2024 | Global (1) (excluding 4G) |
Tunisia | March 2031 | 4G |
Source: data from national regulators.
(1) Global: refers to the type of license that allows an operator to offer both fixed-line and mobile services through all of the available technologies (depending on the country, the Global license does not include 4G technology).
1.7.2. Regulation of banking activities
In the context of an increasing number of regulations, several significant reforms of the banking and finance sector impact Orange Bank’s business:
-MiFID II: In May 2014, the European Union adopted a new framework for the financial instruments markets known as MiFID II (in the form of a MiFID directive and a MiFIR regulation). This framework was transposed into French law, notably by Government orders of June 23, 2106 and June 22, 2017 and came into effect on January 3, 2018. The goal of these regulations is to improve the security, transparency and operation of financial markets and to strengthen protection for investors. The regulations notably provide for an improvement in the information given to customers about the suitability of financial products in the light of their knowledge, experience, financial situation and investment goals and about the costs and fees of the services provided and the financial instruments contracted. The regulations also increase the obligations related to the reporting of transactions involving financial instruments to the supervisory authorities;
-AML/CFT: decree no. 2018-284 of April 18, 2018 which supplemented order 2016-1635, and came into effect on December 1, 2016, transposed into French law the fourth European directive EU 2015/847 of May 20, 2015 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing. It strengthened the anti-money laundering framework and requires banking institutions to determine the risk profile of each customer and to assign a suitable monitoring profile;
-AIFM: delegated regulation no. 2018/1618 of July 12, 2018 amending directive no. 2011/61/EU AIFM of July 1, 2011 creating a harmonized framework for the managers of alternative investment funds and intended to improve the protection of assets and information to investors and to standardize the responsibility of depositaries and sub-custodians;
-CRS: driven by the G5, then the G20, as part of its efforts to combat international tax evasion, the "Common Reporting Standard" on the automatic exchange of tax information was published by the OECD on July 21, 2014 and implemented in the European Union via directive no. 2014/107/EU of December 9, 2014. In France, the CRS regulation came into effect on January 1, 2016 with over 100 countries committed to information exchange. More than 50 countries (including France) started exchanging information on the basis of the CRS in September 2017. The French system was supplemented by decree no. 2018-569 of July 3, 2018, which has been applicable since November 1, 2018;
-Sapin II Law: the law on transparency, combating corruption and economic modernization of December 10, 2016 also includes measures intended to protect savers and investors, notably by providing a framework for requests to substitute credit insurance in mortgages and providing for the option of waiving payment protection insurance within a period of 14 days;
-directive no. 2016/97 of January 20, 2016 on insurance distribution, transposed into French law by Government order 2018-361 of May 16, 2018 and by the decree of June 1, 2018 is intended to increase consumer protection and harmonize regulations, notably by creating a standard information document, by improving the prevention of conflicts of interest, by imposing product governance rules, by requiring distributors to take ongoing training and by defining the scope of their advisory obligation;
-dematerialization: the order of October 4, 2017, effective April 1, 2018, on the dematerialization of contractual relations in the financial sector is intended to promote the use of virtual communication media while ensuring a sufficient level of protection to consumers. It enables customers, in certain cases, to request paper media and that documents provided in the customer space be made available for a sufficiently long period of time;
-PSD2: as part of the creation of the single payment services market in Europe, directive (EU) no. 2015/2366 of November 25, 2015 (PSD2, transposed into national law on August 9, 2017) adapted existing rules to new payment services and strengthened payment security rules. It notably imposes requirements with respect to strong customer identification and protection of their personal security data.
