The puck stops here for Orange

SOLOMON Trujillo, the new chief executive of France Telecom-owned Orange, doesn’t speak French. Instead he uses a form of executive ice hockey-speak, which he employed to baffling effect at his ‘strategy day’ in London last week.

Trujillo began by likening Orange’s "mission" to the skills of somebody few in his audience had ever heard of - Canadian ice hockey star Wayne Gretzky, whose fame apparently comes from being in the right place at the right time. "It’s about going to where the puck will be and that is where we, Orange, intend to be," said Trujillo, leaving his audience asking what the puck he was talking about.

The audience, mainly analysts and telecoms media people, had gathered in a huge, white marquee erected by Orange in Lincoln’s Inn Fields in the heart of London to find out two things. Prior to the meeting there had been growing optimism that after three grim years, Trujillo would signal the start of a prosperous new era for Orange - the one-time promising challenger to Vodafone and MmO2 reduced to a third-rater since being acquired by state-owned behemoth France Telecom in 2000.

They also pined for a clue as to whether the 51-year-old American would prove to be a puppet of Orange’s hugely indebted parent or an independent pioneer who would skate speedily towards new markets and reward its loyal minority shareholders - France Telecom owns 87% - with a payment. He confirmed the promise of a dividend next year "dependent on shareholder approval" at the annual meeting. That means France Telecom’s approval.

Trujillo has no illusions as to who is his boss. Orange may be paying his handsome salary, but it is to France Telecom’s tune that he dances. Any dividend will be dependent on the company not siphoning off most of Orange’s revenues to reduce its Titanic-size debts. The immediate fall in the price of the shares - and their downgrading from ‘outperform’ to ‘neutral’ by CSFB - expressed the disappointment felt.

Trujillo told his audience he had already made two important decisions. Orange will join a telecoms alliance comprising Telecom Italia Mobile, Telefonica Moviles of Spain and T-Mobile International of Germany to begin a challenge to the dominant alpha male telecoms giant Vodafone.

The alliance would be able to offer customers a uniform set of voice, data and mobile internet services across several European markets (Vodafone can offer cross-border services because it has networks in all Europe’s major markets).

Trujillo also plans to launch 3G wireless services in the UK next year and in France in two to three years. "We are on track for 5% revenue growth this year and we intend to grow more rapidly in 2004-05, with earnings before interest, taxes, depreciation and amortisation [ebitda] of between 15% and 17%," he said.

Trujillo believes subscriber growth in telecoms is less important now. Instead, he is looking for volume growth in messaging, minutes used and transactions. The key to higher customer spending, he says, is in identifying the groups of users to target and giving them the services they need.

He accepts the land grab for new subscribers at any price is over. Orange reacted to Friday’s UK High Court decision, upholding a regulatory ruling forcing mobile operators to reduce charges for calls from fixed lines, by saying it would have to cut handset subsidies, traditionally aimed at attracting new subscribers.

Orange’s strategy will be to dominate the market in the segments it chooses. "Without this [segmentation] we really cannot grow any more than we have recently. I have seen this done in other industries I’ve worked in, in the fixed line business, in cable, and it’s worked like a charm every time," Trujillo said.

He has been a member of Orange’s board since 2001 and took the helm as chief executive last March just two days before France Telecom announced the biggest loss in French corporate history - 20.7bn (14.7bn). The loss included a 7.3bn hit from its German affiliate MobilCom, a 4bn writedown relating to its telecoms carrier Equant, and a 1.7bn provision on its stake in British cable group NTL. "These figures make you dizzy because they are absolutely remarkable," FT’s then chief executive, Thierry Breton, said at the time.

Trujillo has taken a big gamble in accepting a job so far from home which demands regular commuting between London and Paris. He must juggle cost-cutting with selective investment while soothing investor nerves and finding growth for a company which has 44 million subscribers in a wireless-saturated Europe.

In the US, ‘Sol’, as he is known, features regularly in business magazines. In Europe he is relatively unknown outside the telecoms industry. He is well aware why former Orange chief executive and founder Hans Snook, the dotty, feng shui and colonic irrigation enthusiast, never fitted in at France Telecom. It was a case of entrepreneur versus bureaucrats - a poisonous cocktail in any land but a particularly deadly concoction in France. Snook resigned in December 2000 to be replaced by Jean-Franois Pontal.

But la challenge formidable is to the liking of this former chief executive officer of Denver-based telecoms company US West, and there is no doubt that Trujillo is a big hitter. He successfully built US West following the break-up of Bell Telephone, into one of the most successful ‘Baby Bell’ businesses in the US.

Trujillo pushed the company into new technologies such as wireless internet services, high-speed internet access and video transmissions over ordinary copper lines. But growth came at a price. Customer services suffered and US West won the reputation at one time of ‘US Worst’ as it battled with state regulators and trade unions. Trujillo grew up in Cheyenne, Wyoming, where his father worked for Union Pacific Railroad. By most accounts he was a hard-working young man, proud of his Hispanic roots. He helped pay for his education by washing dishes, playing in a Mexican mariachi band and by working for a removal company.

Trujillo began his professional career with Mountain Bell Telephone, becoming president and chief executive of US West in 1995 and chairman in 1999. He quit in June 2000 - just before the telecoms bubble bust - on completion of US West’s merger with Qwest Communications.

Under his direction, US West became a leader in telecommunications, particularly with its deployment of high-speed data services and advanced wireless services. After leaving US West, Trujillo worked for a small company called Graviton, developing advanced wireless sensor networks. It was during his time with Graviton that he and his wife Corrine, who have three daughters, committed $1m to endow the Solomon D Trujillo Centre for e-Business with the Wyoming University’s College of Business.

Awards and accolades have been heaped on him - some for his dedication to good causes. He was recently described as the most powerful and influential Hispanic business executive in the US. Among his many directorships are PepsiCo, Gannet, Target Stores and Bank of America. He has been on the chairman’s council of Alcatel since 2000. He is a governor of the World Economic Forum for the information technology industry and is an adviser to the US government on trade policy.

At Orange, Trujillo is quickly making his mark. He is merging IT systems across its business units from billing to customer relationship management, data warehousing and analysis in a bid to increase efficiencies (ie: cost-cutting). He is also adjusting the ways executives bonuses are paid to reflect Orange’s new focus (ie: cost-cutting). "Bonuses will now be based on top-line revenue, on delivery against customer expectations and on cycle time from concept to cash," he says.

Even after last week’s extensive briefing, telecoms analysts remained unsure where the puck will stop and whether Orange will be there. Despite these uncertainties, Trujillo has made a good start in moving Orange away from red towards black.