Francis Gelibter: “The growth of our subscriber base is obvious”

Orange has been operating on the Armenian telecommunication market for over 3 years and it’s been already 6 months that the company has a new CEO who strives to increase the company’s market share in conditions of tough competition. Orange Armenia CEO Francis Gelibter told about the methods of growth on the market in an interview to Itel.am.

- Mr. Gelibter, you have been at the helm of Orange Armenia for already 6 months. How does it feel to work here? What expectations did you initially have and are they justified?

- In my answer I will separate the personal aspect from the professional one. Prior to my appointment to Armenia, I knew that the staff of the company was young , dynamic and innovative. I saw this working here. We have come up with a number of innovative services lately, such as “Orange 1” and “Orange Merci”, and we constantly improve the work of technical and IT-departments.  According to the results of a survey conducted by German independent “P3 Communications” across Europe upon the request of France-Telecom-Orange, Orange Armenia’s 3G network has been recognized as the leader of mobile Internet in Armenia.

As for the personal aspect, I have had enough time to get acquainted with Yerevan and travel across the country; I was in the North and in the South, I visited big and small towns- Kapan, Goris, Sevan, as well as small villages. But there is still more to come. I like living and working here. As I have already stated in August, this is not my first visit to Armenia, but this time I had a chance to better get acquainted with the country and the people, and it is part of my interest in working in Armenia.

- Did you make any changes in the management of Orange Armenia or you just continue the strategy of your predecessor?

- I have set up a new body of company management – Executive Committee which consists of 7 directors who make decisions on key development directions. The Committee meets every week to make key decisions on current development. The purpose of the change is to increase the dynamics and the frequency of decision making.

We also have a Coordination Committee, which meets less frequently – once a month. The meetings are held in a larger composition and during them the managers minutely discuss business development issues.

 I haven’t changed the company’s managers. Personnel changes would be strange since the company is developing rapidly and successfully.

- What are your strategic priorities as Orange Armenia CEO?

- The first one is certainly the increase of the number of voice and Internet subscribers. This is what I call the quantitative growth of the company.

The second one is the improvement of the service quality. From the technical point of view it concerns the expansion and improvement of the coverage, but from the non-technical point of view- it concerns the service in the shops, improvement of call-center’s services, etc. We are currently working on what we call a customer experience, we analyze all our processes in order to improve or simplify them where necessary.

The regulator decided to introduce the Mobile Number Portability System since January 1, 2014.  It is very important as this service increases the freedom of customer’s choice.  We are now working with our colleagues-operators to elaborate a detailed plan for MNP introduction after which we will concentrate on the technical execution.

- In his recent interview to iTel.am, the head of one of the telecommunication companies told us that MNP won’t be applied on the whole territory of the republic but partially, only in places where the operators provide coverage.

- Today the operators cover about 95-96% of Armenia’s population, and the coverage will soon reach 98%. The last coverage ratio is the hardest one, as no country has 100% coverage. France is proud that it created the GSM system in 1990 and today provides about 99% coverage.

So, starting from January 1, 2014, 96% of Armenia’s population can use the NMP system. This is a good opportunity for the client to choose the operator he prefers without changing his number.

- Orange Armenia is reaching the second place on the Armenian mobile market, although the phase of the impetuous development of voice services in Armenia seems to have passed.

- Today we occupy the first place in Armenia in terms of mobile Internet  and 17-18% of the market of voice services. This is a good result taking into consideration 3.5 years of activity on the market. When I compare our results with other global operators, who have been the third at the time of entrance to the market, I see that our result is one of the best.
 
Over 3 quarters of 2012, Orange Armenia’s revenues have grown by 46% given the fact that the market was growing by 3-4 % in average. The growth of our subscriber base is obvious- there are a lot of people whose numbers begin with 055 or 095.

- There is an opinion that future perspectives of development of voice services in Armenia are rather small and the main fight among the competitors will be held on the data transfer market. What do you think about it?

- Over the last 3.5 years we have increased the number of our voice subscribers from 0 to 250 thousand people, which visually shows our stormy growth in terms of voice services. The revenue growth rate in terms of voice cervices over the last year totaled over 60%. So, we can’t say that all the resources of development of voice services are exhausted.

The introduction of MNP will give a new impetus to the development of voice services. Everything will depend on the operators’ efforts, service quality, their innovative and competitive offers.

As for data transfer, there are really big growth perspectives in this area too. We are now at the very beginning, when the so-called “basic Internet” is developing; as for the content- everything is still ahead.

- In 2009, I visited the R&D Division of Orange in Paris, where I got acquainted with the technologies the Group was introducing in various countries. I particularly remember HD TV services. When can we expect such solutions in Armenia?

- Today we face many challenges in terms of technological development of services we provide. Being the branch of France Telecom, Orange Armenia has an access to innovative technologies worked out by our mother company: our My-Fi product and the HD voice- are the inventions of France Telecom’s techno-center.

As for digital TV services, we can’t provide them yet as we don’t have digital broadband channels. We will get back to this issue when we fell that the growth opportunities in mobile networks begin to run out.

- What is the financial position of the company?

- In 2012 our revenues totaled over AMD 20 billion, having grown by 48%. We have already reached a positive balance on our current operations. Speaking the language of financiers, EBITDA is now positive. Incomes are growing which allows us to independently cover our expenses since the end of last year.

In late 2013, our incomes will allow us not only to cover current expenses, but also to make investments into innovations and network development. It will be the next stage of our development.

- Orange is the official distributor of iPhone in Armenia. Why buying a smartphone in Armenia (even with subscription) is much more expensive than in other countries? In particular, the cost of a smartphone in the U.S. and Europe with subscription is only $ 200.

- This price is the cost after being subsidized by the operators. Orange is not only the only official distributor of iPhone in Armenia, but also the only operator on the Armenian market that subsidizes the subscriber fee.

We subsidize the prices of iPhone in Armenia less than in France or U.S. simply because the operator’s average monthly income per one subscriber in the U.S. makes about $50, in France- about $35-40 and in Armenia - $12-15. This is why the subsidies cannot be big enough.

As for prices without subsidy, France Telecom has a contract with Apple on global cooperation, which allows being competitive enough on the Armenian market. I will disclose a secret: the margin on Apple’s products in Armenia is less than 10%.

Besides the price, people also care about the warranty service, and if something happens with the smartphone the customer has bought, he can always count on us.

Ruben Harutyunyan talked to Francis Gelibter