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Sébastien Crozier – head, Orange Horizons

‘The local MVNO, charge you such a large amount, it’s incredible.’

HILTON TARRANT: Sébastien Crozier is head of Orange Horizons, a unit of French operator, Orange Telecom. Sébastien, in the country for the MVNO Industry Summit, which took place in Cape Town last week, not many people know that Orange is active in the country and active in this market, where is Orange active?

SÉBASTIEN CROZIER: We have many activities, for example Orange Business Services for the * market, we have many customers like Total but also *, Anglo American. We manage the networks for the international airports all over the world and especially in South Africa also. We have a boat to settle * cable and the boat is at the moment in the harbour of Cape Town. Also we have another subsidiary dedicated to transmission through satellites for TV channels, GlobeCast. So we are very involved in South Africa with many different activities and now we have launched Orange Horizons more dedicated to the B2C market.

HILTON TARRANT: So this specifically focused in the retail environment and the consumer environment?

SÉBASTIEN CROZIER: Yes, focused on the end customer through retail, online store but also Wi-Fi network selling products from Orange countries when you want to travel in physical retailers. Also we could become MVNO if the regulation was good enough.

HILTON TARRANT: With the potential entry as an MVNO in this market is it purely a regulatory obstacle at this point?

SÉBASTIEN CROZIER: Absolutely, we think that the regulation does not exist for the MVNO market, in many countries all over the world there is a regulation for the MVNOs and that’s not the case in South Africa. We think that having an MVNO market is interesting for a country because it increases the competition and just for an example the roaming price when you want to travel is absolutely amazing, all the local players, the local MVNO, charge you such a large amount, it’s incredible.

HILTON TARRANT: As far as an MVNO entry goes are you active in other countries as an MVNO?

SÉBASTIEN CROZIER: Yes, we are an MNO in 32 or 33 countries but also in many countries we are MVNO so we know perfectly both sides of the market. This is the reason why we are interested in becoming MVNO in South Africa, we think South Africa is a very important market and also a very interesting market.

HILTON TARRANT: How would you describe this market as you see it, obviously two very large operators, one or two challenger operators, from a regulatory point of view, from a competition point of view?

SÉBASTIEN CROZIER: There is not enough competition because having only two major players proves that there is not enough competition. You need to have three or four players and also many small players MVNO targeting niche segments. So this is the reason why we ask the regulation authority to be more involved in the MVNO market because we think that there is a lot of things to do, innovation is always brought by competition and we think that it’s important for the market to be more challenging.

HILTON TARRANT: Why the MVNO route? Why not a straight forward acquisition of one of the existing operators?

SÉBASTIEN CROZIER: It’s a good question, of course sometimes in some countries we’re interested in buying some players but at the moment we think that it’s not interesting for us to buy anybody in South Africa. Perhaps some player could be interested in selling their activities but at the moment we’d prefer to enter into the market step by step. It’s quite unusual for Orange to settle in a country without being and MNO but we think it’s a long-term strategy more interesting because we learn a lot about the market, so if we have to become an MNO we could also become an MNO through having frequencies, not only through buying players.

HILTON TARRANT: Have you had any positive feedback from the regulator?

SÉBASTIEN CROZIER: We have good discussion with the regulator but we still ask for having an MVNO regulation to be able to launch MVNOs, especially ours.

HILTON TARRANT: Your activities in the country in the B2C space you have got an e-commerce store in South Africa, you have got a partnership with Nashua Mobile and a retail presence in a few of their stores, is their traction, have you seen traction in both of those spaces with those activities?

SÉBASTIEN CROZIER: We are very excited about the increase of the turnover for our online store because it’s only a six month old online store and the turnover is increasing each quarter at a huge rate, a little bit more than expected. So we are very happy we have devices, accessories but also SIM cards for travellers and we think that there is a great interest for the e-commerce in South Africa? On the physical retail aspect with Nashua, with our partnership with Nashua, we are very happy and we have decided to launch this week two other countries, so you can buy SIM cards if you want to travel to the UK or if you want to travel to the Ivory Coast. The UK is a very important country for South African people because a lot of them are going to the UK much more than to France unfortunately.

HILTON TARRANT: Sébastien, what about termination rates in this market, they have been high historically, we saw them come down from R1.25/minute to the
40c/ minute level, is that still too high?

SÉBASTIEN CROZIER: Yeah, to our experiences still very high and in any case it’s not because you have a termination rate that you have a wholesale price
* for MVNO. So it doesn’t solve the main question is if you want to become an MVNO what is the price you can have to a hosting partner. So it doesn’t solve anything and also the question is when global regulation about MVNO is going to be there because it’s not only a question of termination rates, it’s also a question of can you choose your roaming agreement abroad, can you choose your international carriers and many things like that. So we think that more regulation can improve the competition and can improve the customer experience.

HILTON TARRANT: You mentioned Wi-Fi earlier on, what about Wi-Fi in South Africa, very limited coverage. Obviously overseas we are seeing mobile network operators entering that market and offloading data traffic especially onto Wi-Fi networks. Here in South Africa a different picture all together.

SÉBASTIEN CROZIER: Yes, of course, you have to have a global overview about the market. At first is that’s not sure even with 4G, the 4G is able to deliver all the data demands. So what we think is we think that in a few years 50% of the data is going through Wi-Fi and only 50% through 3G or 4G. So we think that the lack of Wi-Fi is going to be difficult for the country because it’s going to be completely full and the quality of the 4G is not going to be there is there is not also Wi-Fi. So we have decided to launch a Wi-Fi network at first targeting customers coming from abroad because when you come from abroad you’re also afraid about your bill shock.

Don’t imagine that there is only a bill shock when you are South African, there is also bill shock when you come from other countries. For foreign people coming into South Africa they’re looking for data access and it’s sometimes very difficult to find. Also if they find one of them a local brand doesn’t mean anything for a foreign customer. Our brand is very powerful and we think that we have tested that if we have a Wi-Fi network under the Orange brand a lot of the foreign customers are going to be very happy to use our network. We think it’s a good thing for South Africa because you’ll be able to have a better customer experience and you will increase the tourist attraction.

HILTON TARRANT: Sébastien Crozier, head of Orange Horizons, unit of French operator, Orange.

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