Orange threatens to leave emerging markets

Mobile operating giant Orange has threatened to pull out of emerging markets if it does not meet two important targets.

Orange’s Executive Vice President for Africa, Middle East and Asia Marc Rennard said that the company would have to increase its revenue from €3.4-billion (US$4.5-billion) today to €7-billion (US$9-billion) by 2015 and become the number one or two operator in each emerging market to consider staying.

The announcement comes in the wake of news that the operator would be offering Visa Mobile Prepaid functionality to its customers using Orange Money across to the Middle East and Africa.

Orange Money is the mobile phone-based payment service designed by Orange to meet the needs of customers in Africa and the Middle East.

The mobile giant claims that the service offers subscribers applications such as person to person transfers, bill payments, and agent-based cash-in and cash-out services for loading or withdrawing funds. Orange reportedly plans to introduce Visa payment capability to Orange Money subscribers in select markets by the end of 2012.

Visa Mobile Prepaid claims to enhance the security, scale and interoperability of mobile money programs, such as Orange Money, by enabling account holders to make person-to-person payments, retail and e-commerce purchases at merchants where Visa is accepted, or withdraw funds at Visa ATMs.

Orange’s other initiatives in the region include offering its subscribers to browse Wikipedia without incurring data charges and giving them access to Facebook via USSD.

These initiatives are clearly not, however, an indication of any unconditional, long term commitment.

According to Eden Zoller, Principal analyst at tech research company Ovum, Orange faces a couple of challenges when it comes to emerging markets:

The first of these “is how to build out network infrastructure cost economically, particularly in larger African markets.”

The second is a perennial challenge in markets where feature phones still predominate and involves “moving users beyond voice and SMS to more advanced data services”.

One way that Orange could do so is by joining forces with other operators to collectively source phones for emerging markets, using their collective buying power to pass cost benefits onto consumers.

Thing is, that doesn’t seem to sit easily with the competitive stance it appears to be adopting.

It’s all well and good saying you want to bring better phones into emerging markets, but you have to be particularly careful about how you do so.

According to Zoller “the pricing of data services beyond SMS to price sensitive consumers is an issue that needs to be addressed and this is problematic”.

Although Orange appears to have some plans in place when it comes to achieving its goals, one thing is clear: there are no easy answers.