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Orange eyes SA mobile market

Cape Town - Global telecoms firm Orange is interested in the South African market but the company is taking a cautious approach.

"The game is changing in South Africa so being there, learning the market with humility – to be prepared in case of the market changing," Sèbastien Crozier, Orange Horizons CEO told Fin24.

The company has been building its consumer facing presence in SA with a number of initiatives.

It has expanded its online store with a warehouse in Sunninghill, Johannesburg as a way of delivering mobile phones and tablets faster to customers.

Orange has partnered with African Eagle Tourism to provide free Wi-Fi services within their fleet of vehicles. The service is primarily directed at tourists who value connectivity when visiting Cape Town.

Consolidation

"South Africa is an interesting market for many reasons: At first, it’s the most important economy in Africa and Orange is already settled in 16 countries in Africa as a real mobile operator," said Crozier.

Orange operates mobile networks in over 20 countries, including key markets in Africa like Kenya and Egypt.

However, in SA, the company has settled on the outskirts of the operator industry, and there has been speculation that Orange could buy a junior operator like Cell C or even MTN.

"We don’t have any discussions to buy any player but entering the market – nobody knows how it can happen," said Crozier, pouring cold water on that speculation.


Even if Orange had to by a local operator, it could not transfer the spectrum to the international entity. (Duncan Alfreds, News24)

If indeed Orange opts to buy a local mobile operator, it would have to create a joint venture as regulations prohibit the transfer of spectrum.

Industry insiders though, do expect that the mobile industry in SA will experience a period of consolidation, especially as operators look to expand their footprint.

MTN has announced its intention to buy Afrihost as the company sets its sights on delivering fibre to the home.

Vodacom has a similar plan to buy Neotel, though both deals are subject to regulatory approval. Vodacom has also signalled its intention to expand into Africa.

New technologies

In its annual results presentation, Vodacom reported a 21.8% growth in international customers, with an 86.4% growth in data customers.

Orange has had business operations in SA since the 1960s, and Crozier said that it was well-placed to consolidate its position despite the number of operators in SA.

"In many countries, even with a high level of penetration, if you bring innovation, if you bring new offers, you can always take market share," he said.

He warned that new technologies could prove more challenging to the operator model than simply the addition of a new player.

"We don't know whether the OTT players are the real competitors. Perhaps WhatsApp is more dangerous as another mobile player."


The uptake of smartphones will contribute to data demand. (Duncan Alfreds, News24)

The instant messaging company was recently acquired by Facebook for $19bn and announced a plan to roll out a calling service that could reduce the cost of voice calls in much the same way that chat has reduced the cost of texting.

The service is expected to be launched in July, and Crozier said that it highlighted the need for Orange to focus on data.

"I think there is a great opportunity in South Africa because there is a lack of data use. There is a lack of data use because of a lack of infrastructure, especially on Wi-Fi. The question has to be put on the table: Is it normal that the main mobile operators don’t cover the entire country by investing in 3G or 4G and they restrict their investment to the rich areas?"


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