), the erstwhile France Telecom S.A. is considering entry into
Canadian wireless market as it pursues global opportunities to
compensate for increased competition in its home market. Though
Orange is already present in Canada through its business service
unit, entry into the country's wireless market will bring a much
wider business scope for the carrier.
Orange Horizons, a new growth vehicle of the French telecom
operator is reportedly in talks with Canadian Radio-television
and Telecommunications Commission (CRTC) and is accessing the
possibility of an MVNO (mobile virtual network operator) launch
in the country.
Necessarily, a MVNO does not require huge start-up investments
in spectrum acquisition and installation of cell towers. Instead
an MVNO leases tower space from existing service providers and
offers communication services.
The Canadian government has been trying hard to reduce rates
and increase competition thereby making it difficult for the
large incumbents like
Rogers Communications Inc.
) to move ahead of others by leaps and bounds. This opportunity
urged the U.S. telecom giant
Verizon Communications Inc.
) to make a big ticket investment in Canada earlier in the year.
Although the discussion is at a nascent stage, Orange's
interest in the Canadian wireless market does not come as a
surprise. The company has been considering all business
opportunities including the launch of online mobile stores or
MVNOs in various countries to boost its revenue growth.
Orange has been reeling under pressure in the domestic market
with the entry of start-up carrier Free Mobile in 2012 by Iliad
AS. The low cost rate of Iliad has been able to lure French
customers and eat up market share of all the big operators in
France, including Orange.
Entry in Canada's $20 billion wireless market could yield
meaningful results for Orange if it manages to trap customers
with attractive rates. However, we remain sceptical about the
success of an MVNO in a market, where there are some established
industry players with significant market share.
Orange currently carries a Zacks Rank #3 (Hold).
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