• Home
• /
• Local business

Orange Thrives in Downturn as Clients Outsource Telecom Needs

Most of the world’s airports use Orange communications systems to process data about passengers when they check in before boarding their flights. Funds transferred electronically between banks in the Middle East flow mostly through an Orange network.

Carrefour, the French hypermarket chain, is linking all of its stores in the region using Orange computer networks instead of a hodge-podge of lines leased from several different vendors.

Orange has been packaging telecommunications products and services for businesses since 2006, when France Telecom created Orange Business Services to replace its old Equant brand.

Today, with the economic slump putting pressure on many companies to defer investments in their own telecom systems, Orange is racking up orders from clients who are eager to outsource their telecom operations. At the same time, Orange is making the most of efforts by governments to deregulate their national telecom monopolies and create more competitive operators.

Behind the scenes, Orange has been on a roll.

“My job is to simplify complexity. This is what I’m trying to do,” says Lionel Reina, the company’s vice-president for Eastern Europe, the Middle East and Africa. Based in Dubai, Reina oversees business in exactly half of the 166 countries where Orange is physically present.

Foreign airlines were an early cornerstone of its business in the Middle East and North Africa, as were international banks, which account for one-fifth of its 500 customers in the region.

For example, Orange dominates the technology used for money transfers between banks belonging to the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, a global cooperative that ensures speedy funds flows.

While Orange typically seeks business from the local offices of foreign multi-national companies, it also caters increasingly to locally-based clients, such as DP World, that have far-flung international operations.

A key driver of the company’s growth in the Middle East has been to provide network-related or “managed” services, particularly for firms that are cutting back on costly upgrades of their own telecoms networks during the current downturn. “The beauty of managed services is you don’t have to make up-front investments,” Reina told Khaleej Times recently in an interview at his regional headquarters.

A growing number of firms are outsourcing their telecoms business to Orange, he said, estimating that customers can save 15 to 20 per cent on their telecom costs by doing so. “In difficult times, managed services can help maximise the use” of the systems clients may already have in place, Reina said.

Orange also tries to make it more affordable for corporate customers to stay in touch when they’re on the move. It aims to reduce mobile phone roaming charges, for example, and it often bundles services to keep things as simple for its clients as possible.

Among Orange’s best markets is the shipping industry, which needs reliable, on-time data to track cargoes and deliver them on schedule. Some shipping lines still use a courier service instead of telecoms systems for such “mission critical” information, Reina said in disbelief.

Aside from managed services, Orange’s second big focus in this region is project-based real estate. The company has had “great success” advising well-established clients such as Etisalat that are wiring up large property developments. Orange acts as a consultant on these projects but can also build and operate the telecoms systems itself.

Orange posted double-digit sales growth in this market segment in the Middle East last year, and it expect to do the same in 2009. Its “addressable market” for real estate services in the Middle East totals $20-$40 billion, Reina said.

Orange’s international expansion has largely followed in the wake of deregulation in the telecoms industry, wherever that is happening.

Ahmed Hamzawy, the firm’s head of operations for the Middle East and North Africa, said that telecoms liberalisation creates two possible sources of demand for Orange Business Services — new challengers to existing telecom operators, on one hand, and former monopolies and incumbents that see the need to upgrade to stay competitive, on the other.

“We are fortunate that we are in a region that is seeing one of the fastest rates of deregulation,” Reina said.

One Orange project with far-reaching potential would enable Central Banks in GCC member countriesshare data. Reina declined to give further details.

“What we promise to our customers, we deliver. This is what I tell our team all the time,” he said. “We do good business as long as we deliver on our promises.”

· bruce@khaleejtimes.com