France Telecom Orange to build $2 billion network

France Telecom Orange is to build a $2 billion fibre-optic network to serve its home market, and has plans to increase its global customer base from 200 million to 300 million over the next five years.

The company says its ambitious “Conquests 2015” project will increase the coverage and bandwidth offered by its fixed and mobile networks, in both emerging and maturing markets. In particular it has pledged to deliver fibre access to 40% of French households by 2015, and has committed to develop healthcare and education applications, as well as mobile payment services, in Africa.

“We are convinced that new fibre networks offering higher bandwidth will be absolutely strategic in the digital economy that is ahead of us,” said a company statement. “Fibre networks offer speeds up to 10 times faster than that provided by ADSL. This clearly favours the emergence of new internet-based or multimedia services within the home. The unrivaled capacity of fibre optics will allow operators to meet the exponentially increasing requirements of households.”

Charlie Davies, senior analyst at consulting firm Ovum, believes the project will also reshape wholesale telecoms in France: “A new fibre-optic network will mean the end of France Telecom’s dominance of the local loop in dense urban areas, where competitors like SFR and Iliad are already deploying their own FTTH networks,” she said. “They will now have control of their own network end-to-end, and will enjoy higher margins for broadband connectivity. Fibre is particularly important for telcos in France, with the IPTV market developing strongly in the country and with significant room for further growth.”

Davies believes that the rationale for Conquests 2015 may be partly driven by the need to improve internal company morale, with 46 employees believed to have committed suicide since 2008.

She notes also that Conquests 2015 coincides with the appointment of new CEO Stephane Richard: “The unveiling of this strategy enables the CEO to make his mark,” Davies says. She believes there are indications, for example, that Richard wishes to distance the company from previous strategies, such as heavy investment in content to rival players such as Sky.