Q&A with Jean-François Fallacher, Orange Polska CEO

If you were to mention one key development from 2017, what would it be?

Last year was full of important developments. However, to me absolutely the key one was our announcement of Orange Polska’s new strategy which we call I would call it a new momentum. It represents an intensification of our initiatives and articulates the company’s strategic vision to 2020. We want to achieve not only a turnaround; we want to establish a business model that will help create value over the long term.

Why do you think that this time you will be successful with your strategy?

When I arrived in Poland, close to two years ago, I endorsed all of this company’s strategic directions. These were investments in connectivity, convergence and increased efficiency. While these key directions are largely unchanged in the new strategy, what we would like to mainly improve is execution. We need to do all these things better, with clearer focus, more speed and more agility. My ambition is to introduce greater determination and motivation in achieving our goals.

Speaking about motivation, in order to further motivate our top managers to reach long-term goals, and to link their objectives more directly with the interests of our shareholders, we have introduced, for the first time in the history of Orange Polska, an incentive plan based mostly on Orange Polska’s stock price performance. More than 90% of eligible managers have joined this voluntary programme, a clear indicator of their confidence in

In my opinion, both the macro environment in Poland and the dynamics of the telecom market should be beneficial for our plans. Poland’s economic situation is very benign, with rapid growth of private consumption and disposable income. As such, we have grounds to assume that the Polish market may head towards some kind of recovery.

I believe that our 2017 results confirm that our strategy is working and our ambitions are realistic. We are now much more balanced between volume and value, we are much more focused in commercial strategy, and our customer proposals are driven by simplicity and consistency.

What do you see as the key risks and challenges to your strategy?

There are always risks and challenges to any plan but the key to success is to manage them well and fine-tune the plans according to changing circumstances. In my view the greatest risk is in the proper execution, and in this area we are aware of the need to learn lessons from the past. STRATEGY Q&A with Jean-François Fallacher, Orange Polska CEO Orange Polska Integrated Report 2017 41 Even though the telecom business is not too closely tied to the wider economy, the current favourable economic conditions are certainly helpful in boosting demand for our services. We also greatly value the stability and predictability of the regulatory and tax environment. This market is very competitive and at times the intensity of the struggle has led to unpleasant surprises. However I believe we are now in a different stage of market development.

We will monitor the risks and not underestimate them, but are determined to succeed as we are confident that we are putting into place the right plans, the right structures and the right resources.

What are the key priorities for 2018?

In 2018 we will continue to follow the priorities set out in We need to execute our ambitious commercial plans, which include capitalising on the new offer portfolio that we introduced in 2017, exploring further potential from convergence, and increasing the monetisation of the fibre project. We want to maintain the speed at which we build our fibre network. 2018 will include the first active year of the Digital Poland Operational Programme (POPC) which, through investment in less urban areas, will contribute to the development of local communities.

Internally, we will continue to transform our business, increase efficiency and also change our culture. Amongst our employees, I am promoting this idea of a cultural change - for all of us, including top management. Empowering employees is a key element of this change: we want to encourage them to take a risk if they feel that it is needed. It is also about focusing even more on our customers, who are our most important stakeholders. We have to work for their benefit, and be obsessed with improving their experience with Orange. In the end, they are the ones that we want to please, not our bosses. Within our organisation, we want our goals and values to be simple and easy to relate to, so that every Orange employee can identify with them. And to achieve this culture change, we must also change the way we communicate within the company, making it clearer and more open.

The notion of ‘economic patriotism’ has entered the public discourse lately. Is Orange Polska, as part of a global corporation, also a good citizen of our country?

The ‘citizenship’ of a company is not defined by the country of its owners, but rather the benefits it brings to the country in which it operates, the impact it has on economic growth, the new standards it sets and the jobs it secures. Hence, the attitude of a company to the country where it operates is determined by its actual actions. It is the level of investments and their impact on innovations and GDP that define the company’s contribution to the country’s growth. It is important to use local suppliers and service providers, comply with employment standards and pay fair wages on time. Orange Polska meets all these conditions.

The sector in which we operate and its role in the country’s development are also of paramount importance. The network access which we offer increases the attractiveness of particular regions to prospective investors, stimulates the development of local businesses and helps to create jobs. The Polish identity of our Company is also defined by its support for issues which are important to our customers and the country where we operate. A perfect example of our concern is the commitment we made in 2017 to connect 4,500 Polish schools to our fibre network within three years, enabling them to use high-speed Internet at 100 Mbps or more. Orange supports the establishment of the National Educational Network, which is to connect all schools in Poland. The project will be financed entirely from Orange Polska’s own funds and will benefit schools in all regions of Poland.

How do you see the Polish telecom market and Orange Polska a few years down the road?

I have great hopes that gradually the Polish telecom market will be heading towards some kind of recovery. As the prices are already very low, rather than competing mainly on price, operators will be focusing more on quality of products and customer care.

It is quite obvious that the Polish market, similarly to other countries, will be driven by the digitalisation of all aspects of our lives. I still believe that it will eventually consolidate, as it is quite fragmented. There will be fewer players but more integrated and converged. I believe that Cyfrowy Polsat’s pending acquisition of Netia, as well as T-Mobile’s intention to buy wholesale access to our fibre network confirm these opinions.

I strongly believe that Orange Polska by 2020 will be a different company. We will not be seen as an incumbent operator any more but rather as a modern, innovative and agile organisation which is highly appreciated by customers and employees, and valued by investors.

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