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Morningstar | Orange strategy moves forward with its fibre rollout and cost-cutting ahead of schedule.

We view Orange as one of the prime beneficiaries of the movement to converged services (the merging of the traditional triple play of fixed-line telephony, broadband, and pay television with wireless telephony). Convergence leads to lower churn and more-valuable customers. When this is combined with 4G and fibre, which help to differentiate networks, we think Orange is well positioned for the macroeconomic trends hitting European communication markets. We believe 4G is particularly important to Orange, as it has no 4G roaming agreement with Iliad. In our view, Iliad's wireless network in France is of poorer quality than those of the other operators, but the company has thus far been able to hide this by letting its customers roam on Orange's network. Although Iliad has improved the coverage of its network, it continues to send the majority of its calls via Orange's network. As the country increasingly moves to 4G, this quality differential is becoming more obvious. Orange now has 67% of its non-machine-to-machine wireless contract customers using its 4G service.Likewise, its fibre deployment is ahead of schedule, and Orange now has 1.8 million customers subscribed to its fibre product in France, and at the end of September 2017, it passed 8.4 million homes. Similarly, in Spain, the company is rapidly moving to 4G and fibre, where its integration with Jazztel has performed better than expected. It now has 9 million 4G wireless customers and 2.1 million fibre subscribers. In total, Orange now has 59% of its broadband customers in France on converged plans, and 83% in Spain. Orange is also pushing its converged service into the rest of its European footprint and is enhancing its wireless footprint in Africa. The firm exercised its option to increase its stake in Meditel in Morocco and began to consolidate this asset in July 2015. In 2016, it acquired operations in Liberia, Burkina Faso, and Sierra Leone, and it also acquired Tigo in the Democratic Republic of Congo to increase its size there. Orange has operations in 20 African countries, positioning it well to participate in one of the fastest-growing regions in the world.