Showing posts with label OND Research. Show all posts
Showing posts with label OND Research. Show all posts

Wednesday, June 14, 2017

Profile of Orange, a global operation with big ambitions, slow, steady growth – Part 1

Orange S.A. is perhaps the global carrier with operations in the most diverse geographies and cultures. From its headquarters in Paris, Orange (formerly France Telecom) now serves 265.162,000 subscribers worldwide with mobile, broadband, fixed telephony, TV and a range of advanced enterprise services. The total number of subscribers was up 5.13% compared to the first quarter of 2016.

As an incumbent operator with historical roots tracing back to the semaphore long distance signalling system developed in 1792, Orange has substantial network in place, including 18,000 km of fibre optic cable in its home market of France. In 2015, Orange launched a Conquest initiative along with a strategic plan called Essentials2020. These refocused the company's efforts on ultra-high speed fixed and mobile networks, while expanding into new valued-added services such as mobile banking and dedicating itself to improving the customer experience. The company committed to a capital investment of over Euro 15 billion in its networks between 2015 and 2018, including Euro 4.5 billion in FTTH and Euro 5 billion in mobile. The goal is to triple its customers' average data speeds on fixed and mobile networks between 2014 and end 2018, and the fruits of this strategic planning are beginning to appear.


With the release of the company's financial results for the 1st quarter of 2017, Stéphane Richard, chairman and CEO of Orange Group, commented:

-    "The first quarter confirms the improvement in the 2016 trend. Revenues are growing, driven by solid commercial performances, particularly in France, Spain and Poland. The strategy Orange has pursued over a number of quarters, centred on convergence around the home, the best connectivity in the market due to sustained investment, and an unparalleled customer experience, is bearing fruit. For the fourth consecutive quarter, adjusted EBITDA is growing, underpinning the objective for 2017 of delivering adjusted EBITDA higher than 2016 on a comparable basis. Lastly, Orange's diversification into financial services will move into a new phase in 2017. In Africa, Orange Money crossed the 30 million customer mark this quarter, growing by 74% in one year, while in France, the Orange Bank offer will be launched with Orange employees in mid-May and for the general public on 6 July 2017".

Below is a summary of the latest performance indicators:

•   Revenue up 0.8% in the 1st quarter to Euro 10.070 billion, after rising 1.0% in the 4th quarter of 2016 (on a comparable basis), led by the Europe zone and in particular by strong growth in Spain.

•   Group adjusted EBITDA of Euro 2.598 billion in the 1st quarter, an increase of 2.0% (Euro 50 million) on a comparable basis.

•   Group capex of Euro 1.493 billion in the 1st quarter, up 2.1% on a comparable basis, with capex up 1.4% in telecom activities to euro 1.484 billion, while the ratio of capex to revenue from telecom activities was 14.7% (up 0.1 percentage point year on year) and investment in fibre and very high-speed mobile (4G and 4G+) up in line with the goals of the Essentiels2020 strategic plan.

Orange Group Metrics

31-Mar-17
31-Mar-16
Total number of customers* (millions)
265.162
252.211
Mobile customers* (millions)
203.499
190.837
- of which contract customers (millions)
70.418
65.42
Fixed broadband customers (millions)
18.951
17.989
- of which FTTH customers (millions)
3.653
2.226
TV customers (millions)
8.625
8.182
Orange - French market**
Mobile services
Number of customers* (millions)
30.489
28.612
- of which contract customers (millions)
27.09
24.581
Fixed services
Number of broadband customers (millions)
11.22
10.83
Broadband market share at end of period (%)
40.2
40
Number of fixed line subscribers (millions)
18.658
19.077
France
Mobile services
Number of customers* (millions)
21.601
21.768
- of which contract customers (millions)
18.203
17.738
Total ARPU quarterly (euros)
21.4
21.6
Fixed services
Number of broadband customers (millions)
10.962
10.57
- of which FTTH customers (millions)
1.579
1.075
Number of TV customers (millions)
6.687
6.579
Broadband ARPU quarterly (euros)
33.6
33.1
Number of fixed line subscribers (millions)
15.943
16.179
Number of wholesale lines (millions)
13.984
13.993
Europe****
Mobile services
Number of customers* (millions)
49.643
50.361
- of which contract customers (millions)
33.475
31.519
Number of MVNO customers (millions)
6.913
3.455
Fixed services
Number of broadband customers (millions)
6.835
6.282
- of which FTTH customers (millions)
2.013
1.117
Number of TV customers (millions)
1.883
1.551
Number of fixed lines (millions)
8.908
8.993
Spain
Mobile services
Number of customers* (millions)
15.765
15.227
- of which contract customers (millions)
12.65
11.995
Total ARPU quarterly (euros)
13.6
13
Number of MVNO customers (millions)
4.909
1.629
Fixed services
Number of broadband customers (millions)
4.171
3.958
- of which FTTH customers (millions)
1.806
1.018
Number of TV customers (thousands)
537
365
Broadband ARPU quarterly (euros)
31.6
30.6
*Excluding customers of MVNOs

** Customers from Orange France and Enterprise sector in France.

*** Company estimate.

**** Europe: Spain, Poland, Belgium & Luxembourg, and Central European Countries.




High-level perspective for its critical home market

While most of the world's major telecom carriers are pursuing a 'mobile first' strategy, Orange is taking a broader multi-pronged approach with mobile, fixed broadband (fibre), TV and satellite. In its vital home market of France, Orange actually lost subscribers over the past year. This the effect of a mature market where mobile penetration rates are well over the 100% mark. ARPU also declined slightly. Even in its home market, Orange was relatively slow to roll out its 4G LTE network, at least compared to other carriers in the Nordics, North America, Japan or Korea. The 4G coverage rate at March 31, 2017 was 89% of the population in France, 91% in Spain, 99% in Poland, 100% in Belgium, 83% in Romania, 80% in Slovakia and 98% in Moldova.

The sector with the biggest growth in France is fixed broadband, where the number of FTTH installed customers grew rapidly from just over one million a year ago to 1.579 million as of March 31, 2017, a remarkable 46.8% year on year growth. While the total number of broadband customers served by Orange in France remained about the same, it is certainly a good thing for the company that large number of DSL customers are now signing up for FTTH service. These are likely to be higher value customer with less churn and more likely to engage with additional offers from the innovative Livebox customer premise equipment, which will be capable of many more advanced services now that it can be connected at gigabit rates. A new Livebox and TV decoder has been marketed in France since May 2016, and this appears to be a significant factor driving the growth. Orange has also been busy modernising many of its stores.  So far, Orange has opened 72 locations in France with its Smart Store concept.

Overall, Orange's revenue in France are flat, or perhaps 'stabilised', after a long period during which every quarter showed a progressive revenue decline, largely due to inevitable loss of conventional fixed line telephony, the opening of the French market to outside competitors, and most recently the substantial decrease in mobile roaming revenue across Europe, Orange has now showed a very slight (-0.1%) loss in revenue in France.


Saturday, June 10, 2017

Update on the Irish Telecoms Market - part 3

Profiles of the three key players in the Irish communications market

Preamble  

Despite the Republic of Ireland and Northern Ireland being totally separate politically it is interesting and even encouraging to note that many services to some extent ignore the distinction. BT for instance operates across Northern Ireland and the Republic of Ireland as an all-island operation, headquartered in Belfast and Dublin, employing over 3,000 people. Eir also has operations in Northern Ireland, based in Belfast, which own and operate a fibre network ring around Belfast and Northern Ireland linking into the national Eir Network in the rest of Ireland. Vodafone is a UK-based company and for GBP 5 a month Vodafone customers can avoid roaming charges between the two countries.

Eircom 

This company originated from the state-owned telecommunications monopoly Telecom Eireann which went public in 1999 and continues to dominate the country's fixed sector. In 2013 the descendant of that state-owned monopoly was acquired by a consortium of international telco and infrastructure investors. The consortium consisted of Granahan McCourt Capital, led by David C. McCourt, Oak Hill Advisors, as well as the private family fund of Walter Scott Jr. (who sits on the board of Berkshire Hathaway).

Eir Holdings is now Eire's largest communications operator with a variety of subsidiaries including Open Eir (a wholesale fibre network operator operating as Enet), Meteor (the third largest national mobile operator), Eir Business NI (its Northern Ireland business), Eircom Net (an ISP), Eir Mobile, or e-Mobile (an MVNO), Eir UK, and Eir Vision (video business).

For the 2015/16 year it reported revenue of Euro 1,265 million. In March 2017 the company reported underlying 3 months and 6 months revenue to the end of December 2016 of Euro 336 million and Euro 666 million, respectively, both up about 2% year on year. The report also said that it now had 500,000 optical fibre connections and that take up was 31% compared to 26% in the prior year period. It noted 23% of its customers were now taking a triple-play or quad-play bundle and it had now achieved 95% population coverage with its 4G network, which it claimed was three months ahead of schedule.

In September 2015 the company announced a Euro 16 million re-branding exercise whereby Eircom would become Eir using a roughly scrawled 'eir' as its logo. In the official release Richard Moat, CEO, noted that the change to eir would not impact Meteor, which will remain as a standalone brand within the eir Group, consumer and business divisions would operate under the new eir brand, while the wholesale and network business units would operate separately under Open eir, reflecting its open access network. The e-suite of products, including eMobile, eVision and eFibre were replaced by eir Mobile, eir Vision and eir Fibre.

In March 2013 eir committed to investing Euro 400 million in the roll out of a national fibre network, open to all operators, connecting approximately 1.6 million homes and businesses in 26 counties to high speed fibre broadband by 2016. In June 2015, eir extended the rollout commitment to include an additional 300,000 homes and businesses, which meant that by the end of 2020 1.9 million homes and business across Ireland would have access to a high speed broadband network. The company offers both fibre to the cabinet (FTTC), delivering speeds up to 100 Mbit/s, and FTTH delivering speeds up to 1 Gbit/s.

In November 2016 Enet announced a significant new business initiative, namely the construction on its own account of 100 km of high-capacity fibre networking centred on Dublin's main business district and adjacent areas and linking to at least 11 carrier-neutral data centres, as well as five global operators. The wholly owned network is distinct from the 55 city open national network which it manages on behalf of the Republic.

In mid-January 2017 Enet announced that, following investment of Euro 100 million over three years, it had completed the construction and operational implementation of its more than 3,700 km high-capacity multi-fibre national  backhaul network, designed to connect 55 city networks around the Republic of Ireland.

In early February Enet said that 200 sites in Ireland now had access to gigabit broadband  service provided by its national network, which was now being used by more than 70 operators to deliver services to more than one million people.

On April 4th Enet said it would invest over Euro 5 million to connect a further ten Irish localities to its fibre network, namely Donegal Town, Buncrana, Ballybofey, Stranorlar, Ballyshannon, Bundoran, Cootehill, Castleblayney, Ballinasloe and Manorhamilton.

Also on April 4th, Eir announced it had agreed with the Irish government to invest an additional Euro 200 million to lay poles and cable along 23,000 km of roads to connect 300,000 addresses in 890 rural communities originally part of the objectives of Ireland's National Broadband Plan, and that its fibre upgrade program would be completed by 2018, two years earlier than its original scheduled date of 2020.

Vodafone Ireland 


Vodafone Ireland is a wholly-owned subsidiary of the GBP 41 billion sales-level Vodafone Group, which owns and operates networks in around 26 countries and has partner networks in over 50 additional countries. Vodafone Ireland came into being when in 2001 it acquired the mobile operations that had originally been part of the state-operator Telecom Eireann. As shown in Part 2, the company has around a 15% share of the Irish retail fixed voice market, about 20% of the fixed broadband market and about 40% of the Irish mobile market, which it more or less shares with the Irish subsidiary of Hutchison Telecommunications of Hong Kong, 3 Ireland.

For the year to the end of March 2016 Vodafone Ireland, whose staff grew during the year by about 100 to almost 1,000, reported sales of Euro 985 million, up 4% year on year but with an  after-tax loss of Euro 11.4 million, down from a profit of Euros 47 million in FY 2014/15. It claimed this was due to a combination of substantial network investment of Euro 550 million over three years, together with start-up losses at its fibre joint venture, Siro, with ESB, the Irish electricity utility. Vodafone said that investment had enabled it to raise its 4G population coverage to over 90% in every county of Ireland as well as providing improved voice and data services.

Siro's wholesale FTTB services, which is claimed to offer users download speeds in the range 350 Mbit/s to 1 Gbit/s, were launched in November 2015 in Carrigaline in County Cork, with a population of around 15,000, described as the first of 51 towns nationwide that Siro planned eventually to cover. In mid-December 2016 at the opening of its new HQ in Dublin it was announced that the company had already connected 40,000 premises in 17 regional towns and expected to reach 55,000 with its FTTB network by the end of the year. Siro said it expected to invest Euro 150 million in 2017 and to have expanded to over 30 towns during the year. In early December 2016 also it was announced that Siro had signed an agreement with BT which enabled BT to offer its corporate and wholesale customers access to Siro's network.

In January 2016 Vodafone announced the launch of a 55 channel IPTV service over its broadband network, and in July reported service revenue up 2.8% year on year to Euro 242 million for its first fiscal quarter to June and noted that its total mobile customer base had dropped by 19,000 to 1.967 million, while its fixed broadband base had grown by 8,000 during the quarter to 247,000. In early October 2016 Vodafone Ireland announced plans to add 60 additional technical staff over the next 12-18 months.

On March 3, 2017 Vodafone Ireland announced that as part of its preparation to upgrade its mobile network to 4G+ it had conducted trials over a live mobile network in Dublin in real life conditions which had reached speeds of 1,000 Mbit/s.

3 Ireland 

This company is a subsidiary of Hutchison Telecommunications, which is part of the Hutchison Whampoa Group of Hong Kong. Prior to July 2014, 3 Ireland was a minor player in the Irish mobile market with only a 9% share, and still profitless despite having spent over Euro 1.1 billion on building up its operations. However, as of that date it completed the purchase from Telefonica of Spain of its much larger local rival O2 Ireland for Euro 780m, following which the merged company served about 37% of the mobile telecoms market bringing it nominally about level with Vodafone's Irish mobile operation.

Approval of the deal by the European Commission required 3 Ireland to help set up two new Irish mobile MVNOs, UPC and Carphone Warehouse, and to grant them unconditional use of 15% each of its new wireless capacity. The merged company also inherited very substantial amounts of 4G spectrum.

On March 22, 2017, 3 Ireland reported financial results for its 2016 calendar year as follows:

• 2016 revenue down 5% year on year to Euro 655  million.

• Net customer service revenue down 8% to Euro 504 million.

• Revenue from handsets up 3% to Euro 81 million.

• EBITDA up 8% to Euro 188 million.

• EBIT up 3% to Euro 112 million.

It also reported it had 2.069 million active subscribers at the end of December, a rise of 2% from the year before. (At the end of June 2016 3 Ireland reported 2.84 million registered customers).






















Thursday, June 1, 2017

Update on the Irish Telecoms Market - part 2

Market statistics 

The latest statistics published by ComReg March 9th for the Irish communications market (Euro, subscriber units, traffic minutes, percentages): 


        Q4 2016   Q3 2016  Q/Q chg Annual chg 
Total retail market rev 786,979,056 771,259,282 2.00%  1.6% 
 Fixed line retail rev 352,168,098 343,428,620 2.50%  6.0% 
 Mobile retail rev 401,847,730 394,265,887 0 -0.40%
 Broadcast retail rev 32,963,228 33,564,775   (1.8%)   (15.8%) 
Fixed wholesale rev 139,675,999 144,195,780   (3.1%)   (4.5%) 
Mobile wholesale rev 49,649,788 66,702,057 -25.60%   (35.7%) 
Voice traffic mins 4,148,560,007 4,151,766,387 -0.10%   (1.7%) 
 Fixed voice mins 1,022,409,364 1,031,864,645 -0.90%   (6.6%) 
 Mobile voice mins 3,126,150,643 3,119,901,742 0.20%  0.1% 
Fixed b/band subscriptions   1,360,309 1,342,727 1.30%   3.9% 
Fixed subscriptions    1,805,923  1, 798,609 0.40%   (0.9%) 
Fixed voice subscriptions   1,475,661 1,468,960 0.50%   (0.4%) 
Total mobile subscriptions   5,969,928 5,937,883 0.50%   2.0% 
 M2M subscriptions    670,389   647,894   3.5%   21.0% 
 Mobile b/band subs    349,421   361,463   (3.3%)   (12.5%) 
 Other mobile subscriptions 4,950,118 4,928,526 0.40%   1.0% 


Breakdown by type of active broadband subscriptions for Q4 2016 and quarterly and annual growth-rates:  


      Q4 2016   Q4/Q3 2016 growth  Q4 2016/15 growth 
DSL Broadband   435,253   (5.3%)     (17.0%) 
VDSL Broadband   498,844   7.8%     40.0% 
Cable Broadband   366,699   0.1%     (1.9%) 
FTTP     7,623   20.2%     38.8% 
Satellite     5,291   (0.5%)     (9.5%) 
FWA Broadband   46,599   9.3%     7.6% 
Total fixed B/band 1,360,309 1.30%     3.9% 
Mobile Broadband 349,421   (3.3%)     (12.5%) 
Total Broadband   1,709,930 0.30%     0.1% 


(NB: ComReg notes the FTTP number is artificial due to some recent changes in methodology.) 

TV Homes by reception type for January 2017 vs January 2016 (thousands of homes): 

      Jan 2017  Jan 2016
Total TV homes   1,578   1,569 
 Irish terrestrial   191    186 
 Multi total   1,387   1,383 
 Analogue cable/sat 16    21 
 Digital cable/sat 1,371   1,362 
 IPTV     51    29 

Market share data by sector Q4 2016 

Fixed retail revenue market share by vendor for Q4 

Fixed revenue shares were as follows: Eir 43.5%, OAOs 12.5%; Virgin Media 14.7%, Vodafone 14.3%, BT 5.3%, Verizon 2.1%, Sky Ireland 4.9%, and Magnet 2.7% (OAO is other authorised operators with below 2% market share in a quarter; in previous quarters AT&T and Digiweb had market shares above 2%). 

Fixed voice subscriptions market share by vendor for Q4 

Voice subscriber shares were as follows: Eir 39.9%, Virgin Media 23.9%, Vodafone 15.3%, Sky Ireland=11.2%, Pure Telecom 2.9%, Digiweb 2.5%, and OAOs 4.4% (over the last three years Eir's market share has fallen 10 points from 49.9% in Q4 2013 and Sky Ireland's market share over the same period has risen 7.4 points from 3.8% in Q4 2013). 

Fixed broadband subscriptions market share by vendor Q4 

Fixed broadband shares were as follows: Eir 32.6%, Virgin Media 26.8%, Vodafone 19.7%, Sky Ireland 11.8%, OAOs 9.2%. 

Total mobile subscriptions market share in Q4 

Mobile subscriber market shares (including mobile broadband and M2M) were: Vodafone 38.5%, Three Group 34.9%, Eir Group Mobile 18.0%, Tesco Mobile 6.0%, OAOs 2.6%. 

Mobile broadband subscriptions market share Q4 

Mobile broadband subscriber shares were: Three Group 43.3%, Vodafone 43.9%, Eir Mobile 11.1%, OAOs 1.8%. 

Companies that make returns to ComReg data for its quarterly reports: Airspeed Telecom; AT&T Global Network Services Ireland; ATS Voice; Blueface; BT Communications Ireland; Casey Cablevision; Colt Technology Services; Crossan Cablecom; DigitalForge; Digiweb; Edge Telecommunications; Eircom; E-Net; Equant operations in Ireland (EGN BV and ENS); ESB Telecoms; EuNetworks Ireland Private Fiber; Europasat Satellite Ireland; Fastcom Broadband; Fulnett, t/a Strencom; ID; IFA Telecom; Imagine Group; Level 3 Communications (Ireland); Lycamobile Ireland; Magnet Networks; Meteor Mobile Communications; Modeva Networks; Nova Networks; Permanet; Postmobile; Pure Telecom; Rapid Broadband; Ripplecom; Sky Ireland; SprintLink Ireland; Tesco Mobile Ireland; Three Ireland(Hutchison); Virgin Media Business; Virgin Media Ireland; Verizon Ireland; and Vodafone Ireland (total 41). 

See also