Orange doubles down in Romania

• Orange is already the leading mobile player in Romania
• It had acquired a majority stake in a fixed network business to implement its ‘convergence’ strategy in the country
• Now it has agreed to a full merger of the mobile and fixed operations, with the Romanian state owning a 20% stake in the combined company

Orange has strengthened its position in Romania by agreeing with the country’s government to form a single, combined mobile and fixed network operator in which the state will hold a 20% stake. 

The move bolsters the telco’s converged services position in the Eastern European country and gives it a better chance of reversing the fortunes of its Romanian operations. Orange Romania, the country’s leading mobile operator with 9.7 million customers, acquired a 54% controlling stake in fixed broadband and pay-TV service provider Telekom Romania Communications (subsequently renamed Orange Romania Communications) in 2022, a move that allowed the operator to develop and offer converged services (mobile and fixed communications services in a single contract) in line with Orange Group’s pan-European strategy – see Faster fibre rollouts are key to convergence strategy success, says Orange’s deputy CEO.

Now, though, Orange is going a step further by striking an agreement with Romania’s Ministry of Research, Innovation and Digitalization (which currently owns the remaining 46% stake in the fixed line business) to fully merge the mobile and fixed operations into a single company in which Orange will own an 80% stake (and 80% of the voting rights), and the ministry will own a 20% stake and associated voting rights.

The merger, which is expected to be completed during the first half of this year, will enable Orange to better target the combined customer base, simplify operations and corporate governance, and reduce network and IT costs to “generate significant synergies,” noted Orange Romania, which already consolidates the Orange Romania Communications numbers into its quarterly reports: The combined operations currently boast about 1.1 million fixed broadband customers and 1.2 million pay-TV (cable and satellite) customers as well as its 9.7 million mobile users, though these numbers have been shrinking during the past couple of years.

That simplification and lower cost base is needed, as key business numbers have been heading in the wrong direction in recent times, with full-year revenues on course to decline by about 10% for 2023 to just over €1.5bn from about €1.7bn in 2022. Orange Romania already implemented job cuts last year to reduce its operating expenses, with news of that move emerging only weeks after Orange Group announced it was moving Julien Ducarroz from his role as the head of Orange Poland to take over as CEO of Orange Romania.   

“We are really pleased to announce the conclusion of such a strategic agreement for Orange Romania, which marks a crucial moment in the company’s history and confirms the confidence of the Ministry of Research, Innovation and Digitalization in our strategic ambitions, in project and in the team,” noted Ducarroz in the official announcement about the deal (in Romanian). “Now, with united forces, we accelerate towards the fulfilment of the common goal: to be the first option for fixed-mobile services in Romania,” added the CEO. 

Orange’s main rivals in Romania are Vodafone, which has about 8.77 million mobile customers, 711,000 broadband customers and annual revenues of about €800m, and Digi Communications, which has about 5.6 million mobile customers, 5.6 million pay-TV customers, 4.5 million broadband customers and which is on course to report full-year revenues of more than €1bn. Vodafone Romania has recently turned a corner and has been growing its mobile user base following several quarters of decline, while Digi has been growing its customer base across all of its operations.

- Ray Le Maistre, Editorial Director, TelecomTV