Operators in emerging markets need to “explain and convince” regulators of the value of investments in mobile networks as a way of countering the trend for increases in taxation, Marc Rennard, senior EVP for Africa, the Middle East and Asia at Orange, said this week.

Speaking in a media roundtable, the executive said: “It’s horrible, because all of the states are poor, all of the states need money in the short term to pay civil servants, to build infrastructure and so forth. And when they see we are profitable it’s a natural trend to put more taxes and more taxes.”

“But what they need to keep in mind is that we need to be profitable in order to invest. In our discussions, we have to try to convince them that the interest of the economy of the country is to invest in the network, rather than to put additional taxes,” he continued.

Rennard told Mobile World Live that having an ongoing debate with the authorities is a critical part of the business, but is nevertheless a complex process.

“If you have a good relationship with them, explain what you are doing, saying ‘we will invest 10 per cent of our revenue, we will bring the internet, but we need to have this visibility on taxation,’ they listen to you. But at the end of the day, very often they need money for the population,” he said.

With Africa and the Middle East proving a major growth driver for Orange – in its H1 2014 results presentation, it noted it has 91.8 million mobile customers in the region, and that revenue had increased by 7.4 per cent to €2.1 billion – the executive was quick to note that the region has a lot of upside.

“At the end of the day, we are happy. Everybody is calling, sending SMS, MMS, email, the customers are there,” he said.

While Orange is looking at opportunities in markets such as Mauritania and Togo, Rennard also noted that there is “almost no more space” for greenfield opportunities in the region.

“Our focus is on organic growth, because we have markets where there is room for growth. The first priority is to develop our core business plus new businesses such as mobile data, in our existing markets,” he said.

But in line with Orange’s strategy to be a top two player in the markets where it operates, this also means that its portfolio is under active review.

“Where we are not in a position to become the number one or number two, we need to study an exit strategy, or be part of a merger, either to buy or partner with another operator,” the executive observed.

To this end, it has already exited Uganda, while Kenya is “under study”: “we are looking for partners, we have not made the final decision, but it will not stay as it is,” Rennard said.