The heavyweights of European telecoms have been flexing their muscles again – Telefonica is shoring up its investment in Latin America with the acquisition of Vivo, finally, from Portugal Telecom, while France Telecom Orange’s new CEO Stephane Richard has laid out his five-year plan “Conquests 2015”.
For Telefonica, control of Vivo gives it the opportunity to boost its presence in a critically important market for the Spanish operator. Latin American markets are beginning to come out of their “emerging” phase, say some observers, and it follows that they are going to become a tougher playground in which to take part. Telefonica is increasingly dependent on Latin American markets as its growth in its Spanish home market dries up: in the second quarter of this year Telefonica’s Latin American revenue was up 16% year-on-year to €6.44 billion, in contrast to a 3.2% drop in Spain to €4.69 billion.
In France Conquests 2015 follows the company’s difficult reorganisation in 2006 when it merged many of its services under the Orange brand. Richard says he is looking to put people back at the centre of the organisation and he wants to reduce stress among the workforce – its reputation has been severly knocked by a series of suicides among employees, and he has promised to recruit another 10,000 employees in the next five years. There are also some novel ideas among what might at first blush seem a predictable set of goals. Take for instance, the assertion that Orange must become a “multimedia coach” for its customers by working alongside them to make their digital life easier. It would be good to see a few more large operators follow a similar course of action.
But it too is relying on making the emerging markets of its colonial past – Africa rather than Latin America – as successful for it as they have been for Telefonica. It wants to increase its customer base from 200 million to 300 million by 2015. The company currently has business units in 19 Middle East and Africa markets and 50 million customers in emerging markets, so we can expect it to be on the hunt for acquisitions in these territories in the near future.
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