Stéphane Richard, leader of the world’s second-biggest telecoms company, tinkered in several trades before deciding on communication. He began his career as a political advisor on industry and commerce, which channelled into Compagnie Generale des Eaux, which is responsible for most of France’s water needs. He then became chief executive of the real estate company that has since been reconstructed as Nexity. Creating a reputation between a number of communications networks, Richard eventually worked his way into a senior ministerial position, where he oversaw economy, industry and employment. Perhaps this political arena did not offer enough tangible rewards; in March 2011 he re-entered corporate politics and joined the management of France Telecom (FT), becoming Chairman and CEO.
Some relief greeted Richard’s assumption of the top spot at FT; his was seen as a face that could appease those threatened or put out by outgoing Chairman Didiér Lombard. The former CEO had caused concern among investors – including the French Government, which owned 27 percent of its stock and objected to his wildly expansive strategy. Lombard’s attempted $41bn takeover of TeliaSonera in 2008 was not handled well, and several high-profile employee suicides that year had caused public controversy. Furthermore, analysts felt his investments in films and football-broadcasting rights had not added significant value to the firm.
Richard’s background at the Ministry of the Economy and Industry and Employment, prior to starting at FT, was useful to a company where the government held such a large stake. After joining the management board, he successfully lobbied ministers, and defeated all rival bids on plans to roll out fibre optic networks. This enabled FT to corner the market in high-speed wireless connection services. He then sought permission from the regulator to raise wholesale fees it charges competitors for carrying their calls, which would dramatically increase profits.
Forging a new identity
Richard took direction over the company produced from the 2010 merger of Orange and T-Mobile, which he part owns. He was in the news in February for asserting the company, which was named in transition ‘Everything Everywhere,’ causing confusion among consumers by its identity crisis. He is quoted as saying, “I think we should probably move to a unique, single brand because it is the only way to really maximise the synergies from our joint venture.” He diplomatically attributed the company’s teething problems to a mismatch with its previous CEO Tom Alexander: “At the very early stage of the baby [Everything Everywhere], the first weeks were a bit painful. It was not as dynamic and energetic as it could be,” he said. “Probably the man we chose to run the business, who is very nice and I admire very much, was not totally fit for the job.”
Yet under new CEO Olaf Swantree, this unified brand has not materialised. Although the company shortened its name to the snappier ‘EE’ in September, it allowed pre-existing networks Orange and T-Mobile to continue separate operations. The exclusive 4G contract that EE negotiated from UK regulator Ofcom gives customers the option of upgrading to the faster service; but the three brands have remained distinct, in order to target a wider demographic range. The group has a fair share to deal with from the outcry of rivals O2 and Vodafone, which are pushing to get the same rights to the latest high-speed wireless technology. Even before its privileged 4G contract, Richard’s investment was making healthy profits. Its service revenue grew 3.4 percent in the second quarter, compared with 2.9 percent in the first, excluding what the Competition Commission has decreed an increased reduction in the level of network costs recovered on call termination services.
Crisis management
Richard faced controversy over July’s breakdown of the Orange network in France, and was summoned for questioning by the Commission of Economic Affairs, and the Minister for Innovation and Digital. Orange FT blamed operating problems on a user-tracking software glitch, which may have caused the network to become overloaded with calls. Richard told Le Monde, “We are faced with a sensitive technology, and the technology can encounter problems!” The telecoms mogul explained: “These are machines from the last generation transplanted into May 2012. They are triplets, one in service, another pending and finally one in relief.”
He told another French newspaper that all FT Orange’s 26 million customers would be allocated one day soon, when they could make free calls and texts. He maintained they shared blame for what happened with wireless network provider Alcatel-Lucent, and did not believe it was necessary to fire anyone. It will not cut jobs to save costs either, unlike its rivals, Vivendi’s SFR and Bouygues Telecom.
Competition from new licensee Iliad, whose ‘Free Mobile’ service offers almost non-existent rates of €2 and €9.99 on its monthly plans, is threatening established operators. The French government voiced its disapproval of the planned job cuts, but Minister for Small Business and the Digital Economy Fleur Pellerin also implied criticism of the regulator’s liberal handing out of licenses to irresponsible budget operators: “We want the issue of employment to be taken into consideration more than it has, whereas [regulator ARCEP] has long put the emphasis on the consumer,” she said.
‘Productive’ meetings will result in concrete proposals by the end of September, from which FT Orange should also benefit. Richard has exerted external pressure against President Hollande’s socialist government at a conference in August held by French employers’ group Medef. He criticised Hollande’s proposal to raise corporate taxes: “It’s not the public sector that’s going to create jobs in the years to come, it is companies.”
Richard was awarded one of the highest public distinctions, the Chevalier de la Légion d’Honneur, Officier dans l’Ordre National du Mérite in 2011. The red-ribbon award was created by Napoleon Bonaparte in 1802, and it is perhaps an additional honour that recipients fund the medal themselves through licensed jewellers. This year the plaudit was offered to Sir Paul McCartney; previous recipients include actor Clint Eastwood and singer Liza Minnelli.
In June he travelled to Israel to be present at the 2012 Israeli Presidential Conference, by virtue of his recent venture fund investments in the country. He spoke with other leaders in the communications industry on the future of digital media, such as John Chambers, the Chairman and CEO of Cisco Systems Inc. Richard predicted, “The forecast is that we will soon get to seven billion cellular phones…This will assist in transmitting information and promoting democracy in many countries.” But he stressed that wide-scale infrastructure required diversification into new revenue streams, and cautioned, “We have to be careful not to create bubbles that could burst and cause a lot of damage.”