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PROJECT STUDY ON FRANCE TELECOM PRESENTED BY : ABHISHEK BANSAL NISHANT PALIWAL RAKHEE SONKHLA VANDANA MISHRA KUMAR MANISH

Project Study on France Telecom

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Page 1: Project Study on France Telecom

PROJECT STUDY ON

FRANCE TELECOM

PRESENTED BY :ABHISHEK BANSALNISHANT PALIWAL RAKHEE SONKHLA VANDANA MISHRA KUMAR MANISH

Page 2: Project Study on France Telecom

INTRODUCTION France Telecom is the leading

broadband Internet service provider and the number three mobile operator in Europe and is a worldwide leader in telecommunication services for multinational corporations.

Orange is a subsidiary of France Telecom and provider of mobile communications services.

Services in 23 countries worldwide, including 13 countries in Europe.

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INTRODUCTION

• Serves more than 177 million customers in five continents

• Provides mobile services and ISP under brand name ORANGE

• Consolidated sales of 52.9 billion Euros in 2007

• Current CEO is Didier Lombard.• Employs about 191,000 people

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• France télécom was Known as Direction Générale des Télécommunications upto 1988.

• Became autonomous in 1990.• Head quarters being in PARIS.• Brand ORANGE was created in 1994 for

Hutchison Telecom's UK mobile phone network, which was acquired by France Telecom in August 2000.

HISTORY

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The four key platforms France Télécom operates are:

Fixed line telephone, mainly in France and Poland. Broadband access. Mobile phone telephony. IPTV, though currently only in France and Spain, with

MaLigne TV, now known as Orange TV.

Services

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 In 2005, France Telecom launched NExT, the Group’s transformation plan to become the leading operator for new telecommunications services

. It is a 3-year plan for transformation that will enable the Group’s customers to access a universe of enriched and simplified services and the Group to pursue its transformation as integrated operator.

It is designed to make France Telecom the benchmark operator for new telecommunications services in Europe in terms of innovation, service quality and economic performance

NExT(New Experience in Telecommunications)

Page 8: Project Study on France Telecom

Definition of customer

o Mobile service customers o A mobile service customer is anyone holding a SIM card or

anyone holding a prepaid card who has placed at least one call and has not passed the date after which it is contractually impossible to receive calls.

o Fixed-line telephony service customers o This number is the aggregate of standard analog lines and ISDN access

lines in service (including fully unbundled lines), with each ISDN channel being treated as one line. ISDN: Integrated services digital network.

o Internet access customers o Internet access customers are those who have entered a monthly

payment subscription contract as well as the active customers of free access accounts, i.e. access customers showing activity in the last month, identified by measurable consumption.

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Orange France offers four major types of products targeted at different categories of users: Offers with subscription.Offers without commitment.The new multimedia Orange World offer.For businesses, the Orange Business

Solutions offers.

The Orange france offers

Page 10: Project Study on France Telecom

Business segments In order to reflect the change in the Group and the structure of

its businesses, France Telecom has selected the following three business segments:

Personal Communication Services (PCS) segment consists of the mobile telecommunication services in France,

the United Kingdom, Spain, Poland and Rest of the World. It includes all the Orange subsidiaries, and the mobile operations of France Telecom España in Spain and TP Group in Poland (with its subsidiary PTK Centertel), and the other Group companies abroad;

Home Communication Services (HCS) segment includes the fixed-line telecommunication activities (fixed-

line telephony, Internet services, operator services) in France, Poland and the Rest of the World, as well as the distribution and support functions provided to the other segments of the France Telecom group;

Enterprise Communication Service (ECS) segment holds the communication solutions and services dedicated to

businesses in France and worldwide.

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Orange Business Solutions” is a fully integrated entity that can meet the mobile and fixed-line communication needs of medium and large companies and government agencies.

The “Orange Business Services” offer currently has three main plans: “Solo”

Intended for independent workers

“Venture” Intended for very small companies of up to 10 employees

“Momentum”. Designed for larger-size companies that must be able to operate in a flexible manner and

that need a plan that allows their employees to continue to work when they need to

Orange Business Services

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The Orange World portal offers a multitude of rich and diversified content. Access to more than 60 live television channels 700,000 music titles, 3,000 videos over 200 games, Orange League 1, and the Top 14 in video. Introduction of the 3G+ in November 2006 and the HSUPA

technology in September 2007 allowed an offer of high definition TV for unlimited viewing on mobile handsets.

Film, music and ringtone downloads from Warner Music, EMI, Sony/BMG, Universal Music, and Ministry of Sound

As of December 31, 2007, Orange World had approximately 4.1 million active customers (compared with 3.1 million at December 31, 2006)

Orange world

Page 13: Project Study on France Telecom

 Table of all Group customers (as of December 31, in thousands, for controlled companies         2006                     2007Mobile      

France  24,226  23,268 Europe (excluding France)  59,596  57,157 

World (excluding Europe)  25,840  17,208 Total  109,662  97,633 

Fixed (Source: Informa Telecoms & Media ).      

France  34,174  33,873 Europe (excluding France)  11,998  13,504 

World (excluding Europe)  1,214  1,304 Total  47,386  48,681 

Internet       

France  7,917  6,884 Europe (excluding France)  5,033  5,298 

World (excluding Europe)  152  100 Total  13,102  12,282 

Total       

France  66,318  64,025 Europe (excluding France)  76,625  75,959 

World (excluding Europe)  27,206  18,612 TOTAL  170,149  158,596 

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Gsm and 3G

coverage of France telecom

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United kingdom players

Source: Enders Analysis, Broadband market in the United Kingdom, 3 rd quarter of 2007.

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SIPOC

Source: Enders Analysis, Broadband market in the United Kingdom, 3 rd quarter of 2007.

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Telecom value Telecom value chainchain

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France Telecom’s strategy is designed to respond to the changing telecommunications service sector which is being profoundly transformed, resulting in significant changes in the offer, usages and the competitive framework.

France Telecom believes that the main drivers of this transformation are: Evolving technologies: general use of the IP protocol, broadband,

mobility; development of multi-access handsets and network interoperability;

Evolving customers habit: growth in the consumption of

audiovisual content, abundance, the customization of utilization contexts and services;

Changing industry structures and strategies, and more intense competitive pressures.

STRATEGYSTRATEGY

Page 25: Project Study on France Telecom

Innovation is the Group’s top priority  France Telecom has structured this activity in a way that has no equivalent in terms of its competitors, by

creating a network of Orange R&D centres called the “Orange Labs”, located right next to the places where the new trends are being designed (San Francisco, China) or right next to local needs (United Kingdom, Warsaw, Cairo, Jordan, Egypt).

Broadband is at the heart of the innovation strategy.

The second priority is service quality Having the lowest claim rate, the highest broadband quality in Spain.

The third priority  is to continue developing a strong and recognized brand and to have it bear fruit across the 

various markets.

The fourth priority is to continue improving our operational performance in order to continue reducing costs

The fifth major priority involves orientating the Mergers and Acquisitions activity

The Group’s strategic priorities

Page 26: Project Study on France Telecom
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In metropolitan France, Orange France sells its products and services through a full range of retail circuits: The France Telecom retail network, which had 684 points of

sale as of December 31, 2007 Supermarkets and superstores.About 1,000 independent distributors. Own network of points of sale: 175 “Mobistore” stores.Offers for Businesses are sold by specialized networks:

Five Major Account Agencies.Independent distributors.

Sales, distribution and customer service

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2007 2006 2005

Market penetration rate in the United Kingdom(%)

117.8 116 110.6

Total number of users in the United Kingdom(mn)

71.7 70.3 65.1

Orange UK active customer(mn)

15.6 15.3 14.9

Contracts (millions) 5.6 5.0 5.0

Prepaid customers (millions)

10.0 10.4 9.9

Market share of Orange UK (%)

21.5 21.8 22.1

Coverage of the Orange UK network

99.2 99.4 99.4

Source: Informa Telecoms & Media (3 rd  quarter for 2007). Source: Orange UK.

Page 29: Project Study on France Telecom

SWOT ANALYSIS(by :datamonito

r)

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Wide customer base Orange has a wide customer reach in most of its markets. The company's subsidiary in France,Orange France, is the market leader with approximately 22.6 million registered customers in

2005.Orange UK has approximately 14.9 million customers.

Strong brand image The most significant strength of Orange is its brand equity. The company has been making efforts to build

Orange as the company's leading global brand. The Orange brand, present in France since June 2001, benefited from a spontaneous recognition rate of 87% in the fourth quarter of 2005.

Strong presence in European markets– Communications services in 23 countries worldwide, including 13 countries in Europe.The companyhas controlling interests in Egypt (MobiNil) and minority interests in Portugal (Optimus), Austria(One), Senegal (Sonatel Mobiles), Mali (Ikatel), Equatorial Guinea (Getesa) and the Mauritius Islands(Cellplus).The company also has controlled operations (not Orange branded) in Belgium (Mobistar),Moldova (Voxtel), and Jordan (Mobilecom).

Strengths

Page 31: Project Study on France Telecom

Weakening mobile business in the UK and France– France Telecom's mobile telephony business in the UK and

France has lost ground to competitors owing to ineffective strategies

Weak presence in Asian marketsAsian countries represent a high growth market for the

telecommunication industry. The company's weak presence in the high growing Asian market might limit its future operations and put it at significant risk and enable competitors to enter that market and establish a customer base

Weaknesses

Page 32: Project Study on France Telecom

3G technology– The global demand for 3G technology is on a rise.The number of users for

high-speed data protocol 3G are estimated to rise from 600,000 at the end of 2003 to 240 million by 2009.

Growth in European residential internet market – The residential internet market in Europe is expected to grow

rapidly in the coming years.The broadband internet will reach more than 50% of households in Europe by 2007.

FreeMove AllianceThe company will especially be able to attract multinational

companies and business executives with its seamless international roaming service.

Opportunities

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Saturation in the European mobile market European mobile markets have become saturated as a result of high penetration

rates. In 2005, the market penetration in the UK, Spain, Netherlands, and Switzerland was 110.6%, 105.3%, 102%, 95.5% respectively. This means that most of the population in Europe now owns a mobile phone and there is little room for any future growth.

EU regulation on international roaming In 2006, the European Commission announced the enactment

of a new legislation by way of a regulation under Article 95 of the EU Treaty (which would have immediate effect) to reduce the average cost of roaming by 60% in the 25 EU nations.

Threats

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The national regulatory authorities (NRA) The electronic communications sector is primarily governed

by the Postal and Electronic Communications Code (CPCE)

Autorité de Régulation des Communications Electroniques et des Postes (Arcep)

Agence nationale des fréquences (ANFR) Autorité de Régulation des Mesures Techniques (ARMT) In the United Kingdom, Ofcom is the regulatory authority

responsible for regulating fixed-line and mobile telecommunications, television and frequencies.

REGULATION 

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Personal communication services

Market penetration rate-- 88% Orange network coverage -- 99% Market share excluding MVNOs – 43.8% Number of customers (000s)---24226 Number of broadband customers (000s)-7407

STATISTICS(2007)Group's stake in the capital: 100%

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Home communication services

Number of fixed line customers (000s)—22962Number of Internet customers (000s)—7917Number of ADSL customers (000s)—7296Voice market share—71.9%ADSL market share—49.4%

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FINANCIAL DATA

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RECOMMENDATIONS

FRANCE TELECOM TO GAIN ITS LOST GROUND FROM THE COMPETITORS IT SHOULD FOCUS MORE ON STRENGTHENING ITS POSITION BY USING EFFECTIVE STRATEGIES..

FT SHOULD ALSO MAKE ITS PRESENCE IN ASIAN MARKETS AS THEY ARE HIGH GROWTH MARKETS e,g. INDIA AND CHINA

FT SHOULD ALSO DIVERSIFY ITSELF IN BROADBAND INTERNET WITH NEW TECHNOLOGIES LIKE WIMAX IN EUROPE …

AS EUROPE MARKET IS ON THE VERGE OF SATURATION AS PER THE LIFECYCLE STRATEGY FT SHOULD FOCUS ON LOWERING ITS COST AND REAP REVENUES…

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• www.orangebusiness.com/mnc• www.wikipedia.com• www.francetelecom.com• www.orange.com• http://www.empirica.com/• http:// BUSINESS INSIGHTS.COM• UNITED STATES SECURITIES 

AND EXCHANGE COMMISSION FORM 20-F • Enders Analysis, Broadband market in the United Kingdom• http://www.arcep.fr/index.php?id=1&L=1

BIBLIOGRAPHY

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MERCI