France Telecom SA (FTE), which is working to double revenue from emerging markets by 2015, said African customers’ monthly phone bills will decline further as the company’s subscriber base skews toward lower income users.
Monthly bills globally probably fell 10 percent in 2012 from a year earlier as the price for voice minutes and texts decreased, the operator of the Orange brand said in October. In Africa, where most people earn less than $2 a day, those trends have been exacerbated by more limited incomes and a price war that’s only recently abated, said Elie Girard, the Paris-based company’s vice president of strategy. France Telecom has more than 70 million customers in Africa.
“When the penetration rises, the next customers are always poorer,” Girard said in an interview in London last week. “So you integrate in your base customers who are poorer, who pay less than the first person who got their phone.”
France Telecom plans to reach 7 billion euros ($9.4 billion) in revenue from emerging markets including Africa and the Middle East by 2015 as it rebalances its business away from Europe, where sales are falling even though there are more mobile-phone accounts than people. Orange agreed on an exclusive partnership with Baidu Inc. to offer the Chinese company’s browsers on phones across Africa.
France Telecom will focus on expanding geographically through acquisitions and converting customers to more lucrative data contracts by offering them new content, Girard said.
One example is a version of Facebook Inc. (FB)’s website that has been developed for standard phones that introduces users to social networking and encourages them to upgrade to a smartphone. The Orange brand is also expanding its mobile payment system, which lets customers send money to each other, pay electricity bills and top up their wireless plan.
“The direction is adapting devices and content within the whole ecosystem,” Girard said.
Average bill declines have improved from previous years when competitors were cutting prices to half or a third of their original value, Girard said. When Bharti Airtel Ltd. (BHARTI) expanded in the continent with the $10.7 billion purchase of Zain’s African businesses in 2009, the industry saw dramatic price cuts, Gerard said. In Kenya, prices for plans would be cut in half in a day, and competitors like Orange were forced to match it, he said.
Africa will be the mobile phone industry’s fastest-growing region by subscribers over the next five years as companies build advanced networks and customers switch to broadband, according to consultant AT Kearney Inc. There’s ample room for handset ownership in Africa to grow, from about 73 percent of the population last year to 85 percent in 2015, reaching 900 million users, Kearney said.
To contact the reporter on this story: Amy Thomson in London at email@example.com