French global telecommunications service provider Orange ORAN is jointly working with Huawei Technologies to revamp its IT business. The company’s efforts to overhaul its entire IT business are in sync with its 5-year strategic initiative – “Essential2020”.
In Mar 2015, Orange revealed the details of its Essential2020 project. Under the plan, the company will refurbish its business model to suit the needs of the different segments of its clientele. This latest strategic move is aimed at targeting both price-sensitive low-end customers and high-end clients who value quality of service over price. Essential2020 too looks to address the needs of small and mid-sized enterprise customers as well as larger multinational corporates.
Over 2015–18, Orange is slated to invest a whopping €15 billion (around $16 billion) on its existing networks in a bid to increase fixed and mobile data transmission speed by at least three folds.
To attain this objective, Orange has started trying out Huawei’s new generation platform of products and solutions – Business Enablement Suite (BES), as part of an IT project named Orange Shine. Under the project, Orange will be sharing its Application Programming Interfaces (APIs) with over-the-top (OTT) allies, to augment revenues from digital services.
Huawei emphasizes that its BES technology will enable Internet Service Providers (ISPs) to operate with the same flexibility as OTT companies. Moreover, it will allow them to provide automated and customized service to their customers, thus aiding service enhancement for OTT companies.
Apart from Orange, Huawei has been operating with other service providers like China Unicom (Hong Kong) Limited CHU and America Movil S.A.B. de C.V. AMX as well, with regard to BES conversion.
Going forward, if the trials yield positive outcomes, Orange will possibly announce a coalition with Huawei in this field.
Notably, in the past, for its key business divisions, Orange had used diverse Customer Relationship Management (CRM) and BSS platforms. However, now the company wishes to bring the whole thing under a sole framework. Orange believes the infrastructure overhaul will enable it to come across as a more customer-focused company.
We note that Orange reported mixed financial results in the first quarter of 2015. Although total revenue exhibited yet another year-over-year decline; nevertheless, the rate of decline narrowed significantly in the reported quarter. According to the company, unfavorable regulatory measures and stiff competition were to be held responsible for the decline.
Orange currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same sector is China Mobile Limited CHL with a Zacks Rank #2 (Buy).
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