00:00The traffic continues to grow 10% to 30% every year on our networks.
00:05But revenues are not increasing.
00:07It's a complex transaction because many millions of customers that are at stake.
00:17Welcome to The Big Question, the series from Euronews,
00:21where we sit down with some of the biggest names in industry.
00:25I'm Eleanor Butler, and today I'm joined by Crystal Hedeman, CEO at Orange.
00:32Crystal, thank you so much for being here with us.
00:35Orange has been ranked for the 14th time the number one mobile phone network provider in France.
00:42What is the key to your success?
00:45We've been investing, investing and investing to please customers
00:48who make sure we would meet, I mean, both coverage targets,
00:52but as well keep the increase of traffic that we continue to see in our networks
00:56and then covering railways, covering roads, covering remote areas.
01:02It's a lot of detailed work that our customers don't notice in the end.
01:05You just see whether on or off you get the right network
01:08and you get the quality of calls, videos, streaming and everything.
01:12You recently became the first European operators
01:16to surpass 10 million fibre customers, that was in France.
01:20Why are people choosing Orange?
01:22Well, we've been investing in fibre for already more than 15 years,
01:27and we are indeed the first operator to reach that 10 million milestone
01:31in one country, that's in France.
01:33And it's true that today in France, we have 93% of homes connectable through fibre,
01:38thanks to our investments, not just us, others have invested as well.
01:42And fibre is something that has huge potential to continue to be upgraded.
01:52Telecoms is quite a saturated industry, is that something that worries you?
01:56The telecom industry, because of demography, because of saturation,
02:01because of equipment, is now a slow growth market in volume,
02:06and then the ability to keep on increasing value
02:10depends on our ability to innovate, to provide more services to our customers.
02:14And it's true that if we compare to other continents,
02:17we don't have the growth that we used to have.
02:20But despite that, we need to continue to invest massively on infrastructure
02:23because the traffic continues to grow.
02:2610 to 30% every year on our networks.
02:29People consume more videos, artificial intelligence.
02:32It starts to grow in our networks as well.
02:35But revenues are not increasing,
02:37and the cost of maintaining our networks because of cybersecurity,
02:41because of resilience to extreme events, keeps on increasing.
02:45And that's why we believe that consolidation is a must in that environment.
02:50You recently made a joint bid with Brieg and Free for SFR.
02:56SFR quite quickly rejected that bid.
02:59Why do you think that was?
03:00We're talking about a multi-billion.
03:03I mean, the non-binding offer was 17 billion.
03:06It's still preliminary.
03:07That means we're talking about a lot of money,
03:09so you can expect a lot of discussion to happen.
03:12And it's a complex transaction because many millions of customers that are at stake.
03:17France is our first country for Orange,
03:19so this transaction is very important for us.
03:22This type of transaction is not something that can last forever in terms of negotiation
03:26because the value at stake is important and the dynamic is important.
03:31So that's why it's something that we are clearly engaged in trying to conclude.
03:36But there's no guarantee that this non-binding offer will go to an end.
03:40Critics would say that less competition in the French market could mean that prices will go up
03:46and that services will deteriorate.
03:48Do you think that is a fair criticism?
03:51The reality is that we concluded a transaction in Spain two years ago,
03:55combining Orange and MassMovil to create a leader in Spain,
03:59and we went through the exact same questions from antitrust authorities,
04:03from the DG competition in Brussels.
04:05We explained that, first of all, the market dynamic is very different from what it was five to ten years ago
04:11because 4G has been rolled out, people, consumers are equipped,
04:15and the reality is that three players competing in a flat to small positive market
04:20is probably as competitive, if not more,
04:23than four players or five players competing in a market where there's three, four, five percent growth.
04:29There's been a call from many companies to revise merger guidelines.
04:32Competition is good for innovation.
04:34Competition is good for consumers,
04:37but the reality is that we've probably reached the limit of just looking at price for consumers.
04:42We really need to take into account the ability for companies to invest in a world that's moving very fast,
04:48and where, in our markets, we have to deal with big companies.
04:53The European Commission is working on the Digital Networks Act.
04:57Could you give us a brief resume and tell us your thoughts on the proposal so far?
05:01Today, we have a very heavy regulation for telecom.
05:04That is somehow dated from the time when we had monopoly in every country,
05:09and we decided to open the telecom industry to competition.
05:14And so we need to update the regulation to take into account the fact that we're talking now about fiber networks,
05:20networks, we're talking about 5G networks.
05:23So the Digital Networks Act, it's really about modernizing, it's an analysis from the Commission,
05:29that the investment in telecom infrastructure is not at the level required to provide 5G and fiber to all European citizens by 2030.
05:38We estimate that the gap of investment, given the market structure today, is €200 billion of investment that is not going to come from telecom operators,
05:48unless we provide safer and more incentives to invest in infrastructure.
05:52Also, there has been resistance to the DNA from certain member states,
05:57who argue that consolidation isn't necessarily the best way forward,
06:01and they're clearly resisting greater intervention from Brussels.
06:05What would be your message to these governments?
06:08There's one thing for sure, is that the reality of the markets in every country in Europe, there's huge difference.
06:16I mean, that being said, the need to modernize regulation, to adapt to a new framework, this is something that's true across countries.
06:23So I think we need to find the right balance, and we're not saying that it's going to be one size fits all.
06:28What we're saying is that it's OK to regulate and to fix things when they don't work.
06:33And you've suggested that greater telecoms consolidation is required so that Europe can compete with the U.S. and China.
06:41Can you explain that a little bit more for me?
06:43In the U.S., you have three national mobile operators.
06:47With the size of the U.S., that means they have on average more than 100 million customers themselves.
06:53In China, they also have three operators, and the largest operator in China has one billion customers.
07:00In average, in Europe, a single operator has five million customers.
07:05We have 27 markets in Europe, and the single market, even though it's Germany or France, the largest, or Spain, largest economy in Europe,
07:14they're still much smaller than the U.S. or China.
07:16The fixed cost to maintain a network, to upgrade, is such that the more mobile customers you have, the lower the cost per customer is.
07:25That's why we see a lot of network sharing.
07:27Also, this ability to continue to cope, to make sure that not only we can provide the coverage and the next generation connectivity that's required for European citizens,
07:38but it's also making sure we can cope with the needs to protect and secure those infrastructures.
07:44I think that's a good point to leave it there.
07:46Thank you so much, Crystal, for sharing your insights on the big question.
07:49Thank you.
07:50Thank you.
07:51Thank you.
07:52Thank you.
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