Orange Armenia to prioritize innovation, quality and attention to client’s needs in 2014

Exclusive interview of General Director of Orange Armenia Francis Gelibter to ARKA Agency

ARKA: Orange Armenia obtained its license five years ago and it is now four years the company has been operating in the Armenian market. What is your assessment of the company’s operations over the last years?

Gelibter: During the period we built up a network covering almost 96% of the population, which is quite a good result bearing in mind Armenia’s landscape and numerous small villages. At the same time, the company’s customer database went from zero up to 617,000 subscribers by the end of September 2013. We might not have managed to complete everything, but what we managed is creating an image of an innovative company that is constantly trying to offer new services and tariff plans.

Naturally, in the beginning, when we first came to the Armenian market, we offered Internet services and mobile Internet at reasonable prices and modems for free in particular. Later we launched “Butterfly”, “Dolphin” and “Panther” post-paid tariff plans with telephones and quite wide preferential terms, including free talk time, unlimited packages for pre-paid mobile system and a similar package for unlimited mobile Internet launched in 2013.

I am very happy we had launched new Internet services at the end of September, and by the end of 2012 they were meeting the needs of people who use the Internet more or less permanently. But not everyone can afford paying 6,000 drams per month, and that is why we offered a new service called «Интернет- Café» for residents of the regions using the Internet several times per week to check their mailboxes and social network accounts or to talk through Skype. The new service makes it possible for these subscribers to pay per minute for the Internet used.

I believe this way we managed to somehow boost innovations in the Armenian market. Our achievements are the coverage, the large client database and the innovative services.

ARKA: What is the volume of investments the company has already made in Armenia? What are the plans as of the end of 2013 and for 2014?

Gelibter: As of the end of September, Orange’s investments in Armenia amounted to 268 million euros, including the license for the Armenian market worth a little bit more than 51 million euros. At the end of 2012 we became a profitable company, our revenues exceeded the expenses, and this dynamics proved to be stable. It is another matter that the revenue we have is not yet sufficient to fund further development of the company, new platforms, innovative services and expansion of coverage in particular. This means we still need financing from the mother company.

Every year the company is investing about 10-13 million euros in development of the network, and this level is to be maintained also for 2014 when the main focus will be to increase volume of all key components of the network bearing in mind increase in number of subscribers and in traffic. Development of unlimited voice and Internet services should be taken into account when expanding capacities. Apart from this, smartphones are becoming more and more popular. About 34% of phones we sell are smartphones, which implies certain increase in volumes, and we should be ready for this. If we have not increased capacity of all network components, clients would find themselves with no opportunity of making calls.
The funds will be used also to increase the coverage and apply new IT systems and platforms that enable us creating new services and making new offers to our clients. The planned spending is a little bit less for development of the commercial networks, i.e. new stores or a better relocation.

ARKA: Are there any regions not covered by the company at all? Do you have any 100% coverage plans?

Gelibter: We have no regions uncovered, but there are certain villages where we do not have coverage or the coverage is insufficient. The difficult thing for us is the extremely small villages (with population of some 100-150 people) as it is difficult to find a financial model that will ensure profits. What is more important for us is that a solution is available for each village: if there is communication established there, we are not attempting to cover it, but if not, we are trying to find a solution to provide communication.
This year we resorted to investments to provide communication in small villages because there were no offers there at all. We invested in Kachachkut (Lori), Geghanush and Gomaran (Siunik), Antaramut (Lori). We will cover another two small villages by the end of this year or in the beginning of the next year. Providing coverage in villages with population of less than 200-250 people is rather a social target than an economic or financial advantage.
We provide 95% coverage in villages with population of 1,000 and 90% coverage in villages with over 500 people; hence, there is still room for development. This year we approved the coverage plan for 2014, and if it is approved by the parent company, there will be many surprises.

ARKA: Are the plans to introduce 4G network in Armenia one of the surprises?

Gelibter: In fact, innovations should be introduced depending on demand. Today phone devices supporting 4G cost about $350. They may be of interest to a technophile living in the capital, but not to residents of the regions who can obtain a smartphone for 1 dram in Orange.
In this respect our priority is development of HSPA (High Speed Packet Access). We are one of few companies in Europe providing coverage of up to 21 Mb/sec throughout the country, which is similar to high-speed fixed-line Internet. Moreover, we provide 42 Mb/sec in 5 big cities, which is similar to 4G and may provide from 50 to 150 Mb/sec depending on traffic.
Today we, first of all, need to provide HSPA coverage not only in Yerevan and big cities, but also in villages. Later, I believe, more widely used and more affordable 4G handsets will arrive in the market, and then it will make sense to develop the fourth generation networks.
Naturally, we are very cautious about technology developments and possess quite a volume of data through our parent company, but the priority, for me, is to ensure a wide range of services in the regions at reasonable prices. This will be the priority for 2014.

ARKA: What are the trends in attracting new mobile subscribers? How many subscribers to mobile and Internet services the company has today? What are the company’s plans on network development and new subscribers?

Gelibter: The company’s income rose by 17% in the nine months of 2013 as compared to the same period of 2012, whereas the market growth ranges between 4% and 5%. This means we have provided growth three times as higher as the average growth rate in the mobile communication market. For the third quarter alone the income was a bit more than 6.1 billion drams. As to the trends, development dynamics varies from one direction of the business to another. For instance, we do not have big increase in number of subscribers for prepaid system and growth comes from their increased traffic, whereas the main increase factor with postpaid packages is the growing number of subscribers. Many subscribers prefer transferring to postpaid tariff plans because of the service packages and preferential terms. Apart from this, we are still the only company in the market providing a subsidized phone or smartphone when customers subscribe to postpaid tariff plans for one or two years.
In general, an interest trend can be seen in Internet development. For instance, if in 2011-2012 fixed-line Internet was developing quite rapidly, now we have a stabilized proportion of fixed-line and mobile Internet. This is the result of intense efforts on improvement of network quality, throughput and speed, on introduction of innovations that led to increased database as early as in 2013.

ARKA: That is why smartphone sales have increased?

Gelibter: Smartphone sales are increasing for two reasons. First, everyone got used to watching weather and news and chatting on mobiles. Second, smartphones do not cost a fortune anymore. For instance, we are now selling Alcatel Pixi, it is a quite good model, but costs 40,000 drams only. Moreover, if the client obtains one of the postpaid plans for two years, he or she may get the smartphone for one dram only. On the other hand, smartphones that were expensive a year ago cost less and less now. Many of our clients are buying smartphones at 150-180 euros or 40-60,000 drams on average.

ARKA: Orange Armenia is an official partner of iPhone in Armenia. What is the company’s policy in providing new gadgets bearing in mind France Telecom has a contract with Apple about global cooperation, which allows being quite competitive in terms of pricing policies?

Gelibter: We are the exclusive partner of Apple, which empowers us not only to provide smartphones at reasonable prices and subsidize prices using tariff packages, but also to be confident in terms of warranty service.

ARKA: What is your opinion of the Armenian mobile market? Does it have growth prospects? What do you think what can make mobile communication further expand and attract new clients?

Gelibter: According to our estimates, the market will grow by some 4-4.5% every year. Capacities of all mobile operators will be used at a greater extent due to introduction of MNP (Mobile Number Portability) in the country. Everybody knows starting from 2014 a new system will be applied in Armenia when clients will have an opportunity to choose the operator they like, while maintaining their numbers. It is very convenient as now subscribers choose an operator depending not only on services, but also on how convenient transfer to another number is.

Orange is also offering a service that enables new clients informing their friends about Orange the new number. But practical experience shows clients are cautious: they value their old numbers. Hence, I hope, we will manage to increase comfort from use of basic services.

Another direction is the trend for development of mobile Internet through smartphones as many see their mobile phones are assistants helping them not only communicate, but also obtain information and make orders. It is not ruled out we will be able to pay against accounts through the mobile soon. We will be also developing other fields that may seem unexpected to many people. In particular, on November 8 we will announce about a new direction of Orange together with one of our partners.

ARKA: Are you planning to offer digital TV services, bearing in mind France Telecom possesses such technologies?

Gelibter: We have already launched TV on Phone services, we have devoted users of this service, but we are considering another aspect of the issue now – will the company be providing Four in One services – mobile communication and internet, fixed-line Internet and TV. I don’t rule out we will do that. We do have room for growth in mobile communication and we possess even greater opportunities on mobile portability when all subscribers will have a chance to pick up the operator they like.

ARKA: The Armenian regulator obliged the company to apply the Mobile Number Portability as from January 1 2014. What were the additional investments required for introduction of the service?

Gelibter: There is a law and there are regulations adopted by the regulator. A Union of Mobile Operators with all three operators was created. This Union announced a tender for installation of equipment and all systems. In the near future a contract will be signed with a Slovenian company that won the tender. Technical implementation implies installation of centralized equipment to support subscribers, and every subscriber will have to get his equipment adapted to it.

According to our estimates, cost of the entire project for Orange Armenia only will be a bit less than 1 million euros. For comparison, one base mobile station site costs from 100 to 150,000 euros. I think, it is a quite reasonable cost to be paid for giving clients a free choice opportunity.

ARKA: Are there any estimates as to how the customer database will increase after MNP is introduced? It was about 5% in some European countries?

Gelibter: In fact, it is difficult to say. It is very difficult to rely on experience of other countries, as, for instance, the service has been used by 21% of subscribers in Turkey and 1% in Finland. Everything depends on the situation. We have already conducted quite a detailed study in Armenia, and the outcome is promising. The most important thing is that it is a display of sound competition. We are for free competition and freedom of choice.

The first results can be finalized after a year, for the time being we will be working to offer the services and the quality clients need. Some services may be getting cheaper, but, most probably, the companies will competing in service packages and their tariffs. Finally, we will achieve a level when customers will consider prices of all operators reasonable and then the question will be the service.

ARKA: What are your projections of developments in the Armenian mobile market for the near future and what are the company’s plans on the market?

Gelibter: According to our projections, general market growth will be 4-4.5% per year, mainly from increased talk time and greater volume of Internet services. Now we have a bit more than 17% of voice services market and the priority is to occupy at least one third of the market. As to Internet services, we hold a bit more than 57% of the mobile Internet market, and, hopefully, will maintain the first place through My-Fi service, as the new modem gives an opportunity for connection of several devices at the same time.

ARKA: What are the financial indicators of the company, the income in the nine months of 2013 in particular, as compared to the same period of 2012? What are the targeted levels for 2014?

Gelibter: We do not release early reports about the company’s financial performance, but I can tell you the company’s income rose by 17% to 17 billion 124 million drams in the nine months of 2013 compared to the same period of 2012. We have proven being a profitable company since November 2012, which is good. Yet, the current level of income does not enable us making the required investments, and we will have to work hard to cover our expenses on development from our profit in 2014. –0--  

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12:50 11/28/2013