TELECOMS & MEDIA INDUSTRYIN FRANCEDIDIER QUILLOTCEO COYOTE SYSTEMFormer CEO ORANGEFormer CEO LAGARDERE ACTIVEDIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013
1. How to destroy €6 billion ofvalue in the French telecomsmarket?2DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013
MAINPLAYERSActivityMOBILEISPMOBILEISPMOBILEISPISPPromiseProximity to itsclients,innovation andexcellence.Excellence and« bespoke »service.Best value formoney withinnovative offers!Simplicity,generosity,technologicalinnovation for itscommunity2011 ResultsIn France (*)Sales in France in2011 => 22,5bn€EBITDA margin inFrance in 2011 =>38%Sales in France in2011 => 12,1bn€EBITDA margin inFrance in 2011 =>19%Sales in France in2011 => 5,2bn€EBITDA margin inFrance in 2011 =>21%Sales in France in2011 => 2,1bn€EBITDA margin inFrance in 2011 =>39%Before January 2012 :A robust market with strong margins !(*) Sources: 2011 accounts (Orange, Bouygues, SFR & Illiad)3DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013
January 2012 : Free launches Free Mobile starts a revolution inthe French market ! Aggressive offers => unlimited calls and no minimum contract period. Aggressive prices => 2€ and less than 20€. Effective positioning => simplicity and defence of the consumer4DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013
Number of new clients in2012 (just 1 year) !Free blows apart the existing French telecoms model !Price : 2 offers at ultra-low price withno minimum contract period! « Fulll unlimited » for 19,99 € (15,99 if Free is ISP) « Starting offer » for 2€/ month for 1h of calls + 60texts (free if Free is IAP) Simple and easy to understand, no MCPProduct : the handset is soldseparatly! Complete transparence in price structure Redefiniition of the subsidy modelPlace : distribution « without stores »! Internet : main source of new clients Very few stores, still in development.Promotion : let the « hype » do thetalking for you! Launched without an official media campaign Media and social « hype » organised andcontrolled by Management Organisation of TTMThe « 4Ps » of mobile telephony!(*) Sources:Iliad accounts 2012.55.2 Million
Around € 6 bn of value will be lost in the French Telecoms market !With Free Mobile at €20 + €2 offerWith Free Mobile at €30Without FreeSales estimates in France for mobile and fixed-line telephony for retailmarket [€bn]*Initial estimatesDoes not include Pro and B2B market impact* Source :Roland Berger Strategy Consultants, estimates with 30% EBITDA.SALES = -18,1bn€ & EBITDA = -5,5bn€6DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013
The competitors fight back and reorganise the market !1- OFFERS : Launch of low cost offers and careful attention to product mix to retain value!2- WARGAME 4G: Use Data to maximise value!3- HANDSETS: Control mix of Android Vs iPhone to limit the handset subsidy.4- RETAIL AND CALL CENTERS: Sell stores to multi-brand and move call centers offshore.5- HR: Lobbying to underline negative social and employment consequences.7DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013
1- Network sharing will become a necessity (optical fiber & 4G).2- Using 4G to rebuild the offer’s value by the data.3- Category management between low cost and top-of-range offer.4- Organisations simplification and social costs reduction.DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013 8Main consequences for the French market in the future :
2. Characteristics of telecoms vs.media markets in France.9DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013
Characteristics of the French TELECOMS & MEDIA market : Highly consolidated (few players) Highly capital intensive (large CAPEX to deploynetworks) Highly profitable Large marketing budgets ++ Importance of TTM Importance of retail Importance of quality of service => network Importance of client relationship (CALL CENTER& CRM) HR : culture of the engineers10DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013 Highly fragmented market Low CAPEX requirement Low margins Digital economy Importance of brands Importance of content and talent management TTM naturally very slow but acceleratingthrough effects of internet and social networks Importance of Click and mortar and print andmortar HR: highly undisciplinedVs
DIDIER QUILLOTCEO COYOTE SYSTEMFormer CEO ORANGE FranceFormer CEO LAGARDERE ACTIVETHANK YOU!DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013
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