Global Insight Perspective | |
Significance | Equant, a subsidiary of France Telecom, will this week launch the Orange brand in Russia. |
Implications | Orange is relatively unknown in Russia, so expansion into the country, while potentially lucrative, is also something of a risk. |
Outlook | France Telecom will hope that by targeting business customers Orange will find a niche in the Russian market, at a time when domestic operators are looking to expand into Western Europe. |
International telecoms group France Telecom (FT) is to launch its "Orange" brand in Russia on 10 October 2006. FT will offer services through its Moscow-based, 100%-owned subsidiary, Equant. Billboards bearing the Orange logo have begun appearing in Moscow, and while the official cost of the rebranding campaign has not been revealed, it is estimated that FT is spending somewhere between US$1 million and US$2 million. Equant currently operates in 35 cities across Russia, selling telecoms equipment and offering communication and system integration services. It targets the higher spending corporate sector, and last year generated revenue of US$167 million, which, according to Novecon, made it Russia's third-largest alternative operator by revenues in 2005.
Outlook and Implications
Orange Going Global: FT's rebranding of Equant in Russia is part of a much larger, international operation to market all its internet, TV, mobile, and business services as Orange (see World: 1 June 2006: France Telecom Adopts Orange Brand for Internet, TV and Mobile Services). Its Wanadoo and Equant units have therefore already been renamed in France and the United Kingdom, while it also recently changed the name of Spanish unit Amena (see Spain: 3 October 2006: France Telecom Plans US$1.91 bil. Push into Convergence in Spain). Similar marketing of the Orange brand is expected to be completed in the Netherlands, Senegal, Mali, Jordan, and Equatorial Guinea before the end of the year, with all subsidiaries likely to adopt the brand in the coming years. FT will hope that "Orange", currently best know as the brand of its cellular operations in France, will ultimately become globally recognised as the market-leader, the "Coca-Cola" of the telecoms sphere. An integral part of this expansion policy will be using the new brand to facilitate bundled packages, incorporating fixed, mobile, and internet services.
Relatively Unknown in Russia: While Orange is already well-known in most European countries, it is a relatively unrecognised brand in Russia. The promotion of Orange in France, the United Kingdom, and Spain has capitalised upon existing market awareness of the brand, but in Russia the pedigree of the brand—and the company behind it—is unlikely to be as known. There will therefore be some pressure on Equant to market not just the logo but also the range of services and quality of Orange. As such, launching Orange in Russia may represent something of a risk to FT. However, the size of the Russian market, its position as the dominant telecoms market of the Commonwealth of Independent States (CIS), and its geographic position linking Eastern Europe and the far-eastern markets of Asia make it an essential part of FT's expansion plan.
Targeting of the Business Sector: While Orange may be an unknown brand to many residential customers, Equant will hope that targeting corporate clients will reap benefits. Management figures, particularly of large companies with international operations, are likelier to be aware of the Orange brand than residential customers, and FT has already indicated that Orange in Russia will be aimed at this sector. Such businesses may be keen for the international exposure which association with the Orange brand would bring, and Equant will presumably aim to capitalise.
Telcos' Expansion Plans: Russian telecoms operators have shown an eagerness to expand operations and export their brand names overseas. The country's second-largest mobile operator, VimpelCom, has marketed its "Beeline" brand into one of the most recognisable in the CIS, with operations in Ukraine, Uzbekistan, Kazakhstan, and Georgia (see Russia: 4 September 2006: VimpelCom Revenue Tops US$1 bil. in Second Quarter). Altimo, the telecoms arm of Russian holding group Alfa, has recently announced plans to expand into South-East Asia, and is seeking partnership with a Western European telecoms operator to effect this expansion (see CIS: 19 September 2006: Altimo Creates New International Advisory Board). FT's aim is to expand in the other direction, but if adeptly marketed, Orange could become a sought-after partner for a Russian business with aims of expansion and exposure in Western Europe.