France Telecom - South Africa’s mobile telecommunications market is becoming highly competitive, with 100 percent mobile penetration and strong market players, as France Telecom tests the waters with the launch of Orange Horizons, according to a new research note from Pyramid Research analyst, Jessica Gendall.
'Orange Horizons' first move has been in South Africa with the launch of two websites and the possible launch of an MVNO (mobile virtual network operator),' said Gendall.
The two websites were launched in mid-January, one being an e-commerce site and the other being a country site.
“Should France Telecom launch an MVNO in South Africa, it would likely be as part of a regional MVNO strategy.” Pyramid Research said in its note Tuesday.
“This would clearly be a new direction for the group, presenting multiple opportunities in the rich Gulf region and beyond to the uncharted waters of the Asia-Pacific region.”
According to the note, the second option of acquiring an operator in South Africa would be riskier because it would require a greater investment, but it would fall within the operator's core competencies.
'Whichever route France Telecom decides to take, it will make for some very interesting developments in the region in the near future and is worthwhile to follow,' Gendall explained.
An MVNO is a wireless communications services provider that does not own the radio spectrum or wireless network infrastructure over which services are provided to its customers.
France Telecom’s recent hints that it might expand into new markets in Africa — namely Benin, Burkina Faso, Mauritania, Togo, Libya and Algeria — should come as no surprise.
According to Pyramid Research, what comes as a surprise is France Telecom’s bold move to launch a new subsidiary, Orange Horizons, through which it plans to seek out adjacent opportunities in emerging markets, including countries where the group is not already a licensed player.
The global telecommunications monitoring firm further observed that France Telecom’s announcement to expand its presence in North and West Africa fits well within the group’s current strategy.
“These markets are geographically ideal because of their close proximity to other markets in which Orange is already a strong brand, particularly Senegal and Mali.
“Expanding into Benin would also be beneficial because it would improve the link between Orange’s network in Niger and the submarine cables that pass along the west coast of Africa.
“Algeria and Libya are ideal conquests for France Telecom because they are relatively rich countries with a great potential for growth for high-priced products like value-added services and mobile broadband, while Ethiopia is a low-penetration country with little or no competition for operators,” said Pyramid Research.
France Telecom expects to make a move into these markets through a combination of traditional licensing, acquisition and partnerships in Algeria, and management contracts in Libya and Ethiopia.
Currently, France Telecom is officially bidding for an MVNO licence in Togo.
These expansions are anchored by the operator’s recently deployed and potentially expansive African Coast to Europe (ACE) submarine cable.
The ACE submarine cable will extend from France to South Africa and link 13 countries, providing better Internet connectivity to Africa as well as adding extra capacity to existing networks.
Other announced plans for South Africa include niche telecom services for tourists and specific products and services not already offered in South Africa.
Orange Horizon’s Managing Director Sebastien Crozier estimates that “over a million people will be coming to South Africa” from countries where Orange is already an operator, providing an opportunity for Orange to market to this target group from within South Africa.