BuyIn featured in the French business press

January 14, 2021 / Béatrice Felder, BuyIn’s CEO, and Ramon Fernandez, Delegate CEO of Orange and Chairman of BuyIn’s Board of Directors, are featured in Challenges Magazine to highlight the strengths of the alliance and its international perspective.

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BuyIn connects the interests of European telcos

Quite discreet, the joint venture between Orange and Deutsche Telekom generates billions of savings. But more than just a purchasing unit, it prepares its partners to face the challenges of tomorrow. And heralds other alliances. 

Without sparkles or drums, Orange will celebrate this year the tenth anniversary of a very discreet subsidiary. Launched in October 2011 with the German group Deutsche Telekom, BuyIn has become essential in the operating of the two historical operators. Its teams, based in Bonn, centralizes all the sourcing from telco companies affiliated to the two big giants, up to 20 billion euros and generate around 2.5 billions savings each year.  “It’s a success story, we’re very happy with our German friends”, says Ramon Fernandez, Delegate CEO Finance, Performance and Development at Orange and chairman of BuyIn’s board of directors. “Ten years ago, the two groups realized that they had to join forces to cope with supplier consolidation and market fragmentation.”

International anticipation

BuyIn adds up the order volumes from around 45 operators. Most of them are subsidiaries from one of the two historical operators, mostly in Europe or in Africa. The structure wants to be a model in terms of balancing the two European powerhouses, the archetype of the good understanding between France and Germany. Last October, it’s a French woman who took over the reins of the company: Béatrice Felder, ex-Orange Business Services. “I am trying to forget that I am from Orange”, jokes Béatrice.

Under her leadership, more than 300 employees, representing around thirty different nationalities – unique at this scale – covering all the needs from the different countries where the two groups have a presence. She follows the former German CEO, Volker Pyrtek, who led the entity during nine years. This ex sourcing boss from Deutsche Telekom worked with a French CFO, Geoffroy de Buchet, who just took the lead of the financial department of Orange France. And who also logically left his seat to a pure Deutsche Telekom product, Michael Rubas.

“BuyIn is more than a central purchasing service”, explains Béatrice Felder. “We enlighten the two groups on the big challenges of tomorrow by providing strategic consulting on the new markets, the newcomers or supplier concentration”. Its perimeter is large: if the buying of content stays with the subsidiaries, it intervenes on all the material and software components of the network, up to the terminals used by the consumers. For the change to 5G, for example, BuyIn allowed the two groups to mutualize the testing of the materials suggested by the equipment manufacturers. They are testing them on smaller countries before launching on bigger markets.

The teams in Bonn also strengthened their expertise on equipment durability and thus manage a real second hand market between the alliance members. On the terminal part, they have built an imposing market base detailing the composition of the pricing of a phone, allowing benchmarks for the 45 operators with the knowledge of the real cost of the materials they are purchasing. In all the cases, BuyIn sets contracts for the different products which will then be managed locally.

Open to third parties

If the two telco giants can be fine with this close collaboration, it’s because they are rarely in frontal competition. “Since they can’t mutualize their networks, joining forces on purchasing is a technique that allows to capture a big part of the synergies generated by a fusion”, observes Stéphane Piot, partner at the consulting company, Analysys Mason. And their cooperation is under very strict compliance rules. The objective is to have some weight against the suppliers whose number was greatly reduced: Nokia, Ericsson, Samsung or Huawei capture most of the market.

Unity creates strength. Recently BuyIn is welcomes other operators, the Canadian Bell or the Belgian Proximus – the former operator Belgacom – that have joined the alliance serving more than 500 millions of consumers. “We only work with a new partner if it makes sense for both parties”, comments Béatrice Felder. In plain language, the new partners must be economically and culturally compatible: sharing of best practices, concurrential lanscape, a whole set of criteria is taken into account.

A couple of years ago, Deutsche Telekom and Orange had tried an operational fusion in the UK, when they were creating BuyIn. It was in 2010, the two groups had decided the join their UK subsidiaries and had created the company Everything Everywhere (EE), that they owned equally. But it didn’t work and was sold six years later to BT. In a framework that has the advantage of being less integrated, other operators could join BuyIn.

Limits in innovation

“It’s a way of building synergies without going up a fusion”, admits Sébastien Soriano, the ex boss of Arcept, who identifies also limits in such a joint venture. “The joint venture works well as long as it’s about basics but it gets complicated when it’s about innovation”.  Djingo, the connected device launched in 2017 by the two operators is here pointed out. Created to compete with Google and Amazon, it was unplugged last October. “We thought there’d be a space to fill in on the market of personal assistants”, explains Ramon Fernandez. “We were right to try but also to stop, considering the resources deployed by the two groups”. Not everything is lost though, as the artificial intelligence developed for Djingo is today included in all the remote controls from Orange.