France Telecom CEO expects more consolidation in Europe

Steve Rosenbush

France Telecom CEO expects more consolidation in Europe

Didier Lombard

I sat down yesterday morning for a briefing with Didier Lombard, the new chief executive of France Telecom. Lombard began his career in 1967, working in research and development at France Telecom. He served in a variety of government technological and economic ministries during the '80s and '90s. From 1999 to 2003, Lombard was deputy ambassador for international investment. He also was the founder and chairman of the French agency for international investment.

Didier took the helm at France Telecom in February, as the company completed a long and difficult financial restructuring that followed the global tech bust of 2000. Now he's trying to move the company forward. Here are some edited highlights of our discussion:

Q. How is the company changing?
A. We are moving to a fully integrated structure with one single network to provide more simple and integrated services to our customers. Though innovation, we create our differentiation and value. We have 17 research and development centers across the world, from Beijing ... to California. We are working very closely with universities and industrial partners around the world. And we are working very closely with all the vendors who supply us with equipment to develop new products.

Q. What sorts of products?
A. The process began in 2003. The first of the products will be available this year. The key is to innovate. We are working with our partners in the areas where they are strongest. We are not trying to develop everything ourselves. We are working with people focused on their points of excellence.

Q. How would you describe the regulatory environment in Europe?
A. Communications markets are going through regulatory stages. In the first stage, the monopoly is dismantled and the market is balanced. In the second stage, the regulator tries to help bring new services to market. In the third stage, the regulator tries to promote economic growth. I would say the U.S. and parts of Asia are approaching the third stage. Europe, or at least France, is between the first and second stage. We're not at the third stage yet, but we'll get there.

Q. How is the integration of Orange, the wireless unit, proceeding?
A. Orange was created by the acquisition of numerous companies, with their own billing and customer service systems. We are integrating those units into a single Orange, and we are integrating Orange into a single France Telecom.

Q. Telefonica appears to be in talks to acquire KPN. Is this a sign that consolidation in the European telecom market will continue? Are national borders an obstacle to consolidation?
A. We already derive more than 50% of our revenue from outside France. France Telecom is a French-owned company, but it is not only a French company. We do business in other countries such as UK, Spain and Poland, and I consider it as a very good footprint to deploy our integrated operated strategy in four main European countries.

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