France Telecom in 2010

France Telecom in 2010

By
Robert Burgelman, Debra Schifrin
2010|Case No.SM186

In 2010, France Telecom faced fierce competition from other large European telecommunication companies as well as from French telecoms. The industry was rapidly changing, and France Telecom found itself also competing with content providers, internet giants and equipment makers who were moving into telecoms’ businesses, creating a “pressure cooker” for telecoms. In response, France Telecom was offering content, such as movies and games, and developing new areas such as eHealth and online advertising.

France Telecom wanted to keep pace with its European rivals, which were growing both organically and through mergers, acquisitions and joint ventures. However, France Telecom had to tread carefully, as it had almost gone bankrupt seven or eight years earlier because of debt stemming from international acquisitions in Europe in 1999 and 2000. Nevertheless, it was widely felt in Europe that consolidation among telecommunication companies was necessary, and France Telecom was entering joint ventures in Britain and Switzerland to expand its footprint. France Telecom was also expanding into developing markets, especially in Africa, which brought higher gross margins but also saw occasional political instability.

France Telecom had an added challenge in that a vast majority of France Telecom employees were civil servants and therefore could not be laid off or fired. In addition, the environment for employees was increasingly stressful and competitive, and people were often re-deployed multiple times in order to find suitable jobs for them within the company. In fact, France Telecom faced a crisis: between the start of 2008 and early 2010, more than 40 France Telecom employees took their own lives.

The case also includes a CEO transition from Didier Lombard (2005-2010) to Stephane Richard.

See also SM194 France Telecom-Orange in 2011: Stéphane Richard and “Conquests 2015”.

Learning Objective
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