Tuesday, March 3, 2009

Orange Outlines 2012 Transformational Strategy

Building on its NExT strategy launched in 2005 to transform itself into an integrated communications services provider, France-Telecom unveiled a new "Orange 2012" strategy to compete in a rapidly changing market and uncertain macroeconomic conditions.

The Orange 2012 initiatives are focused around three priorities:

Simplifying the customer experience -- helping customers address the profusion of technologies and provide accessible services to as many as possible. Orange will concentrate on simplicity, ergonomics and design, as well as quality of service both in terms of products and services and the "customer experience". The initiatives in this field include a particular focus on patents aimed at simplifying product usage, the creation of a dedicated, integrated design and ergonomics team, generalizing usage tests, improving call centre procedures, launching customer care and backup products, etc.

Enhancing the agility with which the Group carries out its business; Orange seeks to accelerate its time to market to seize new opportunities. In light of technological infrastructure developments (fibre optics, HSDPA and eventually LTE) that are expected to occur in the coming years, France Telecom said it will pursue a deployment strategy taking into account the regulatory environment and the speed of adoption in the market.

Ensuring performance that is durable over time. -- Orange 2012 also aims to capitalize further on synergies available across the Group's geographic footprint and to complete the roll-out of its Integrated Operator model. This will include further sharing of networks, information systems and platforms, the extension of innovative initiatives to the greatest possible number of markets and the extension of the Orange brand.

Some other key points of the Orange 2012 plan include:

The France Telecom Group will continue to pursue new growth opportunities, in particular in the areas of content, online advertising and e-health. With regard to content, the Group's strategy will continue to be based on differentiating itself from other players in the ecosystem, capitalizing for example on its expertise in technology and networks that allow interactivity and personalization, or its ability to deploy multi-screen services across TV, PCs and mobiles.

With an acceleration in the number of employees retiring from the Group in France in the medium term, France Telecom-Orange intends to bring forward recruitment for key business areas by applying existing internal and external mobility programmes. In particular it plans to increase by 25% to 4,500 as from 2009 the number of young apprentices it employs in France and to prioritize recruitment in this segment.

Orange 2012's financial ambition is to maintain annual organic cash flow over the 2009-2011 period at a level equivalent to that achieved in 2008 (8 billion euros), based on current macroeconomic forecasts before any acquisition of spectrum. This assumes that investment will remain steady at 12% to 13% of revenues. The Group's new action plans should generate up to 1.5 billion euros in terms of annual savings on costs or investments. This will facilitate the Group in achieving its Orange 2012 financial ambition by balancing the negative factors impacting margins linked in particular to the economic, the competitive or the regulatory environments.

During the period the Group will move to preserve the strength of its balance sheet by reducing its debt so as to ensure a net debt to EBITDA ratio of less than 2.

Regarding potential acquisitions. France Telecom noted that it is focused on organic growth in markets where it is already present; and will pursue targeted transactions in new markets and territories.

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