Orange Romania will keep the same level of investments next year

Mobile operators’ access to fixed networks and the law regarding the registration of prepay card users will be two of the issues on the agenda of telecom players next year, Jean-Francois Fallacher, CEO of Orange Romania, tells BR. Some of the company’s plans for 2015 include 4G deployment and the introduction of VoLTE.

Otilia Haraga

What is Orange’s position on access to fixed networks?

Indeed, we would be interested in access to a fixed broadband local loop for consumers. Why I am saying for consumers? Because for businesses we already have such offerings in the main Romanian cities. When we bought the licenses in September 2012, we, the mobile operators, all had the obligation to provide national roaming to other operators. This has already happened as one of the fixed operators has signed a deal with one of us on national roaming.

Now, what we’re clearly asking from ANCOM is to regulate the fixed market as well. There is a player that has more than a 50 percent market share, which definitely makes that company a dominant player. That player is RCS&RDS. We are just asking for some balance in regulation so we can get access to a fixed broadband local loop. By the way, this would also be interesting to such an operator, because it could generate additional services and additional customers using its infrastructure; therefore it would be a win-win for both parties.

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At the moment, discussions with the authorities are at the point where there is the intention to do it. We expect that behind the intention, they will really start to analyze this market. Romania is the only major market in Europe that is not yet regulated on the wholesale side. I think only Malta is not regulated at the moment. Most of the large markets are. For instance, there is a very interesting regulation that started in Belgium, where the dominant cable operator was obliged by law to open up the TV signal to third parties.

Are there any other regulatory measures that will be important for the market?

As you know, there is a very important topic in Romania which still needs to be addressed: the prepay registration law. At Orange, our position has been very clear from the start. We have always said that we will support this law, if the Romanian authorities are going to push operators to register all prepay customers. On the other hand, we hope we will be consulted on this because we need time to make it happen. In Romania, there are about 12 million prepay cards (all operators together), so you can imagine that registering 12 million customers will take time.

I really hope the authorities will be diligent like they were in the past and agree to get us around the table and make such a law that will make it feasible for us to register these customers. There was talk of registering customers using only digital and online means. We discussed for a long time avoiding having paper forms stamped and signed, which of course you can imagine is much more cumbersome if we must register millions of people.

This is a very important topic for the entire sector. The law was rejected at the end of the summer and with the presidential elections, I think that people’s minds were elsewhere, so I guess the discussions will restart at the beginning of next year. I believe that we will need a year or two to register all the customers. There are many countries that have already enforced this law, France being one of them.

What are Orange’s plans for next year?

4G and 4G + are of course our main priorities, but in the course of next year we will also go for VoLTE. There is no urgency, because as we speak there are very few smartphones supporting this new standard, but it is going to be an important move that we are going to do next year. In parallel with 4G deployment, we will also be refreshing all the equipment in towns and cities. We have already done so in rural areas, and we are doing  that in urban areas as well.

If the environment in Romania remains the same as it has been lately, without major macro-economic issues, we will keep the same pace and the same level of investments.

When the telecom licenses were allocated, no new player entered the market. Do you think this is still possible?

There was no new entrant, but there was a relaunch of RCS&RDS in April this year when it got the opportunity to use its new frequencies. So, in a way, we can say that there has been a new entrant. In theory, I understand that there i still some spectrum that will become available on 4G but it is the role of the government and ANCOM to decide what to do with this additional spectrum.

What we have just observed is that a country like the US has only four operators, while in Europe, there are more than 140 operators. So, a common belief of the telecom sector is that there will be consolidation in many forms, whether they are partnerships or agreements.

Why is that? Well, you’ve seen what happened in the past. Take Romania for instance: the crisis put a lot of pressure on our margins; there was very tough competition which is still going on. And let us not forget the decrease in termination rates. We’re still feeling the effect of this because if we compare ourselves versus last year, we were still enjoying termination rates of 3 cents/minute then, while now they are one cent less. So, if we compare ourselves to last year, we’ve had a drastic loss.

How do you think the convergent bundles will reshape the market?

If you look at the market and the way people are consuming, you will see that a lot of them are still buying mobile services from one place, fixed services from another and TV from another. So a lot of customers today still have two or three providers. We believe this is one direction that the market could go in, but it will take a lot of time simply because Romania is a vast country with 19 million inhabitants.

We are not overestimating Romanians’ appetite for these completely combined services but we think it is definitely a future direction on the market.

How have Orange’s online sales fared?

We have two developments there. Our online presence at www.orange.ro, as well as a mobile site which will enable customers to shop online from their smartphone or tablet. We are also enriching our existing Orange.ro site, so customers can find more information on the products. Right now, the online is quite important for high-value customers, but it is not yet a mass-market channel. However, we are sure it is going to become one.

What are your plans for multimedia content?

Our strategy is not going to change, because we want to be consistent. On one side, we are providing DTH service with linear content. We are the only provider offering 40 HD channels. In September we closed a deal enabling us to distribute the Soccer First League here in Romania, which puts us ahead of the competition. The same month we passed the 110,000 TV subscriber mark. On the other side, we have an OTT (over-the-top) strategy. When you buy Orange TV you get access to Orange TV Go. We have had 800,000 downloads of this app on both Android and iOS.

We have a place in this app where you can watch movies. We have a catalogue of more than 600 films and we are enriching it. Very recently we added Disney movies. We have also managed to close a deal with an American company called Hot from the US, which provides fresh series. Payment is per film. When we launched we were told that this was not a service for the Romanian market but we believe it will catch up.

We have also partnered with Daily Motion, the European YouTube, with which we are building this platform. We do not plan to enter content production. We want, however, to be the best aggregator of content.

Any new developments on NFC?

We had a pilot-project in partnership with BRD and it showed that the service works. Now the challenge for us is to gather more partners around the table because the service needs to be used widely, which is not yet the case. I am sure that if I go to Carrefour Baneasa, which was equipped, and I try to pay with NFC on my phone, the cashier will ask me what NFC is. People also need to be trained in the supermarket. The snowball needs to be pushed.