00:00The traffic continues to grow 10 to 30 percent every year on our networks, but revenues are not
00:06increasing. It's a complex transaction because many millions of customers that are at stake.
00:17Welcome to The Big Question, the series from Euronews where we sit down with some of the
00:23biggest names in industry. I'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. Orange has been ranked for the 14th time the number
00:39one mobile phone network provider in France. What is the key to your success? We've been investing,
00:46investing and investing to please customers who make sure we would meet, I mean, both coverage
00:51targets, but as well keep the increase of traffic that we continue to see in our networks and then
00:57covering railways, covering roads, covering remote areas. It's a lot of detailed work that our customers
01:04don't notice in the end. You just see whether on or off you get the right network and you get the
01:10quality of calls, videos, streaming and everything. You recently became the first European operators
01:16to surpass 10 million fibre customers. That was in France. Why are people choosing Orange?
01:22Well, we've been investing in fibre for already more than 15 years and we are indeed the first
01:28operator to reach that 10 million milestone in one country, that's in France. And it's true that
01:34today in France we have 93% of homes connectable through fibre thanks to our investments, not just us,
01:40others have invested as well. And fibre is something that has huge potential to continue to be upgraded.
01:45Telecoms is quite a saturated industry. Is that something that worries you?
01:56The telecom industry, because of demography, because of saturation, because of equipment,
02:02is now a slow growth market in volume. And then the ability to keep on increasing value depends on our
02:11ability to innovate, to provide more services to our customers. And it's true that if we compare to
02:16other continents, we don't have the growth that we used to have. But despite that, we need to continue
02:21to invest massively on infrastructure because the traffic continues to grow 10 to 30% every year on our networks.
02:29People consume more videos, artificial intelligence. It starts to grow in our networks as well. But revenues are not increasing
02:37and the cost of maintaining our networks because of cyber security, because 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. SFR quite quickly rejected that bid. Why do you think that was?
03:00We're talking about multi-billion. I mean, the non-binding offer was 17 billion. It's still preliminary.
03:07That means we're talking about a lot of money, so you can expect a lot of discussion to happen. And it's a complex transaction
03:14because many millions of customers that are at stake. France is our first country for Orange. So this transaction is very important for us.
03:22This type of transaction is not something that can last forever in terms of negotiation because the value at stake is important
03:29and the dynamic is important. So 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 and 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, combining Orange and MassMovil to create a leader in Spain.
03:59And we went through the exact same questions from antitrust authorities, from the Digi 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 because 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 is 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. Competition is good for innovation, competition is good for consumers, but 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 and where, in our markets, we have to deal with big companies.
04:53The European Commission is working on the Digital Networks Act. Could 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. That is somehow dated from the time when we had monopoly in every country and we decided to open the telecom industry to competition.
05:13And so we need to update the regulation to take into account the fact that we're talking now about fiber networks, we're talking about 5G networks.
05:23So the Digital Networks Act, it's really about modernizing. It's an analysis from the Commission that 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 euros of investment that is not going to come from telecom operators unless we provide safer and more incentives to invest in infrastructure.
05:53Also, there has been resistance to the DNA from certain member states who argue that consolidation isn't necessarily the best way forward.
06:01And they're clearly resisting greater intervention from Brussels. What would be your message to these governments?
06:09There'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 US and China.
06:41Can you explain that a little bit more for me?
06:43In the US, you have three national mobile operators. With the size of the US, 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. We have 27 markets in Europe.
07:07And the single market, even though it's Germany or France, the largest, or Spain, largest economy in Europe, they're still much smaller than the US 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.
07:27So 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 that we can cope with the needs to protect and secure those infrastructures.
07:44I think that's a good point to leave it there. Thank you so much for Crystal for sharing your insights on the big question.
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