Orange UK

Deutsche Telekom searches for T-Mobile US partner

Paul Rasmussen — Fri, 20 Nov 2009 10:18:24 -0500

Having been forced to find a partner for its struggling UK mobile operations, Deutsche Telekom (DT) would now appear to on the hunt for a similar deal for its much larger, but equally troubled, US division.

While DT's head office has formally denied any such move, the well-founded rumours claim that the company is looking for a US partner to help finance billions of euros of investment in high-speed networks. Potential partners being suggested include MetroPCS, Clearwire and AT&T, although a financial investor from outside the telecoms industry is also a possibility. The company is said to be no longer considering a share sale and a takeover of rival Sprint-Nextel.

Hamid Akhavan, DT's COO, said that he expected the difficult business conditions in the US to improve: "We have had some heavy headwinds ... but we are quite optimistic that this trend can be reversed," he said, attributing the problems to a delay in the group securing 3G networks and the population of Apple's iPhone on AT&T's network.

Speculation that T-Mobile US would need to revamp its strategy is not new, but with the company stuck firmly in 4^th position - and continuing to lose ground, a solution has become now more pressing.

Separately, the merger between Orange UK and T-Mobile UK has seen Orange claim that the new company will not have to hand back spectrum in order to get regulatory approval.

For more on this story:
Reuters

Vodafone look to tempt staff away from Orange/T-Mobile UK

Paul Rasmussen — Fri, 13 Nov 2009 12:49:05 -0500

Given that the agreed merger period is around 18 months before Orange UK and T-Mobile UK come together, staff working at the two firms will have plenty of time to review their likelihood of being offered a role within the new company.

This uncertainty has prompted Vodafone to launch an aggressive campaign to recruit staff from Orange and T-Mobile, which has seen Vodafone positioning advertising vans outside the headquarters of the two companies.

With little attempt at subtly, the advertising vans' hoardings showed a woman, roller brush in hand, pondering the colours orange and pink--the respective colours of Orange and T-Mobile. A slogan asked: ‘Need another option? See Red.'

Vodafone HR director, Matthew Brearley, said the operator decided to ‘seize the moment' and launch a targeted recruitment campaign after ‘an influx of applications' from both Orange and T-Mobile staff ‘at all levels of both organisations'. Brearley said the recruitment drive did not contradict Vodafone's wave of redundancies last year, or further huge cost-cutting announced last week.

An Orange spokesman said of Vodafone antics: ‘It is a cheap tactic but we are not surprised.'

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Mobile Today

UK iPhone price war opens with free add-ons

Paul Rasmussen — Wed, 11 Nov 2009 12:39:16 -0500

While Orange and O2 UK have made high profile statements that there will be no price war in the UK over the iPhone, O2 has opened up doors by cutting the price of the tethering option and giving free landline ADSL broadband to its existing iPhone customers.

This move follows the announcement that Orange had sold 30,000 iPhones on the first day it became available in the UK, which the company is claiming as a record for a handset launch. The company also included its Orange Wednesdays app that provides Orange iPhone and iPod touch users a two-for-one cinema voucher that can be used at screenings every Wednesday night.

However, O2 has responded with the incentives of offering a free trial of the Sky Sports TV package for the first 90 days, hoping to lure people in with a bumper package of festive sport and entertainment.

Meanwhile, in an attempt to recover from the confusion surrounding ‘unlimited data limits', Orange has come clean and stated that it won't cut off users breaching the 750Mb 'fair use' data limit on the iPhone. "We don't restrict the service, and we don't charge subscribers any more if they go over 750Mb. It's just an indication of where we'd prefer people to be," said the company.

"When people reach 750Mb they're free to use as much as they want after that. If we see customers using loads more than that though, then we'll send them alerts by SMS or phone call, to tell them they're using more than they should be."

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IT Proportal

T-Mobile and Orange agree JV terms, huge costs savings promised

Paul Rasmussen — Fri, 06 Nov 2009 12:23:42 -0500

Two months after entering exclusive negotiations, terms have been agreed to between Deutsche Telekom and France Telecom over the merging of their mobile operations in the UK. The companies said that the 50:50 joint-venture should produce savings in excess of €4 billion, generate revenues of €9.4 billion and EBITDA of €2.1 billion.

However, these costs savings are seemingly based on some far-reaching assumptions. The merger statement claimed that the Opex savings of €490 million per year from 2014 onwards were dependent on up to €880 million in integration costs over the period from 2010 to 2014, which relate mainly to the decommissioning of mobile sites, the rationalisation of the network of retail stores and the streamlining of operations.

The JV anticipates large scale Capex saving over the first five years due to the integration and unification of the networks and from jointly expanding 3G coverage. The potential for Capex savings, net of integration Capex, is estimated by the JV at €680 million on a cumulative basis over 2010-2014, prior to stabilising at approximately €110million a year from 2015 onwards.

The leadership of the new company, which will have over 28 million customers, has been fudged by having Tom Alexander, currently CEO of Orange UK, as CEO and Richard Moat, currently CEO of T-Mobile UK, as COO. The two brands will continue to operate separately for 18 months after which branding alternatives for the JV will be developed.

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Cellular News and Mobile News

Orange causes confusion with iPhone data download limit

Paul Rasmussen — Wed, 04 Nov 2009 11:21:52 -0500

Even though Orange has not yet launched the iPhone in the UK, it has hit trouble by offering an ‘unlimited' data service with a 750Mb per month limit, and implied that subscribers will not be able to use mobile internet applications like Spotify, AudioBoo, Ustream, Facebook and YouTube.

The company has attempted to quell the rising level of concern by claiming its T&Cs state that the handset is "not to be used for other activities (eg using your handset as a modem, non-Orange internet based streaming services, voice or video over the internet, instant messaging, peer to peer file sharing", a spokesman has stated that "popular streaming services will not be banned for iPhone users."

"As a result," said the Orange exec, "we do not intend to apply network protection controls to anyone, as long as they are within their usage allowance. The T&Cs are in place to reserve the right to restrict access should they continue to exceed our Fair Usage policy."

Orange said that its research in other European countries found that the average user downloaded less than 200Mb per month. Defending the 750Mb limit, the company maintained this would provide a user with either five hours of video downloaded from YouTube, 75,000 mobile web pages, 30,000 normal web pages, around 250 full music tracks or 1,500 mobile games.

Interestingly, the present sole UK distributor of iPhones in the UK, O2, has kept its download offers far more vague without putting a figure on the data limit. There has been evidence of some people receiving a text warning them of their usage and 'suggesting' better plans.

For more on this story:
MacWorld and Network World

Orange UK revenues down 15% despite booming mobile broadband sales

Paul Rasmussen — Fri, 30 Oct 2009 14:26:54 -0400

The Orange PR machine has been in overdrive with the agreement the company has made to become the first operator to offer Google Mobile App across Europe. However, this interesting alliance was not adequate to disguise the fact that its UK Q3 revenues were down 15 per cent at £1.14 billion, while revenues for the first nine months of 2009 are also down around 15 per cent to £3.41 billion.

On a brighter note, Orange revealed that it recorded a 64 per cent rise in mobile internet subscriptions during the third quarter of 2009, reaching a total of around 4.7 million customers. The company was recently rated as the UK's No. 1 mobile broadband provider for getting connected and staying connected in a YouGov survey. Subscribers have benefited from cheaper mobile broadband plans with prices starting at £4.89 a month for speeds up to 3.6Mbps.

The picture is not much different for the parent company of Orange UK, France Telecom (FT), which has reported Q3 profits down by just over eight per cent. The company partly blamed this poor performance on regulatory measures but also the impact of the strong euro versus the Polish zloty and the British pound. Poland generates 10 per cent of FT's total revenue, while UK operations account for about 11 per cent. Domestic revenue accounts for almost half of overall FT group sales.

For more on this story:
Cable and Telegeography

Become an MVNO within 6 weeks, promises Orange

Paul Rasmussen — Wed, 14 Oct 2009 13:09:50 -0400

As the proposed merger with T-Mobile UK enters some rough water stirred up by the UK Office of Fair Trading worried about competition, Orange UK has unveiled plans for a new revenue stream based around MVNOs. The company has agreed a deal with Transatel--a mobile virtual network aggregator (MVNA), to assist with the launch of multiple MVNOs as quickly and cheaply as possible--all in the space of six weeks.

According to Orange UK's VP of new business wholesale and strategy, Marc Overton, the objective is to increase the company's presence in niches that it does not tap easily with its own brand and service offerings. "Our overarching ambition at Orange is to become the network partner of choice for new and existing MVNOs. This partnership has been driven by market demand, as companies are increasingly realising that offering telecoms services to their customers creates additional profitable growth and increased loyalty."

Overton believes that Transatel--which already operates in France and Belgium--could establish around 20 UK MVNOs a year by persuading SMEs and resellers which already target specialised customer bases to sign-up. An example of this, said Overton, would be MVNOs targeting specific ethnic groups with potential customer numbers between 50,000 and 200,000.

The UK MVNO market has proven successful for some ‘big-brand' firms, such as Tesco and Virgin, but dramatically less so for Blyk and Dot Mobile. The market could become more challenging with rumours that Red Bull is on the verge of launching a pan-European MVNO.

For more on this story:
Rethink Wireless

Orange UK tunes 3G to support iPhone; but no price war with other operators

Paul Rasmussen — Wed, 14 Oct 2009 13:04:36 -0400

In an effort to tune its 3G network to support the launch of the iPhone, Orange UK has called in engineering expertise from other group countries to better understand the technical requirements of the device.

According to Orange UK's VP of sales and loyalty, Guillaume van Gaver, iPhone applications require "short, sharp bursts of data usage, unlike the kinds of web browsing most other mobile phones have traditionally been utilised for, which require a sustained data stream."

"From a technical point of view, we have got a great 3G network to launch this device on. The telecoms regulator, Ofcom, has stated our coverage - 93 per cent of the population - is the best, and we have been investing and working to optimise the network specifically for the iPhone," said Gaver.

Dismissing suggestions that the UK subsidiary was putting an inordinate amount of focus on the iPhone launch, Gaver added that Orange had started training its store staff for selling the iPhone, and was readying a third-party training programme also in time for its launch via selected independent partners, including Carphone Warehouse, Phones 4U and a few elite dealers.

The company has also attempted to dispel speculation that it would engage in a price war with O2 over the iPhone ahead of Christmas. Gaver insisted that Orange UK would be price competitive, but was not going to start a price war over the device. "We want to be competitive and we are fine tuning our offer."

While discounting might appear likely, Apple iPhone models cost UK network operators £400-£450 typically, making the margins on them extremely slim and the ability for them to discount stock and retain profitability on sales difficult.

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Mobile News

Orange dropped T-Mobile UK takeover to push through merger deal

Paul Rasmussen — Fri, 02 Oct 2009 08:58:50 -0400

The 50:50 merger between Orange UK and T-Mobile UK was forced upon the France Telecom subsidiary in a rush to complete a deal ahead of rival bids. According to reports now emerging, Orange UK had wanted to acquire T-Mobile UK outright, but had to settle for a merger of equals to persuade T-Mobile to sign the agreement ahead of offers from Vodafone and O2.

The deal, which came after months of speculation and strong denials from the involved companies, was only concluded after details were leaked that Vodafone and O2 had offered around £3.5 billion to acquire T-Mobile UK.

To snatch the deal, Orange instead agreed to a 50:50 joint venture that would see Deutsche Telekom contributing T-Mobile UK and its 50 per cent share in mobile network joint venture MBNL with 3 UK, while France Telecom Orange would put in Orange UK, including £1.25 billion of intra-group net debt. Talks are still ongoing over the finer points of the agreement, but a conclusion is expected this month.

While Orange has indicated that an eventual takeover is the most desirable option for France Telecom, a 50:50 merger is more likely to receive the go-ahead from the UK telecoms regulator, Ofcom. If the deal is signed, the UK operators have stated that they will retain both brands for 18 months, by which time some of the huge integration effort might have been achieved.

For more on this story:
Total Telecom

iPhone pricing set to crash as Orange and Vodafone agree on distribution deals

Paul Rasmussen — Wed, 30 Sep 2009 14:28:22 -0400

O2 UK has relinquished its exclusive distribution deal for the iPhone taking advantage of a two-year break clause with Apple. The agreement, which has seen Orange and Vodafone both step forward and sign up to sell the iPhone, will mean that O2 no longer has to share service revenues with Apple.

This shift in distribution is widely expected to trigger an iPhone price war among the UK's three largest mobile phone networks, although subscribers will still have to sign up to a long-term contract.

"The big winners here are Apple and consumers interested in the iPhone," said Neil McHugh, MD of mobile phone price comparison site Rightmobilephone.co.uk. "Now that O2's monopoly has finally been toppled and with the iPhone now available on three different networks, we should be able to see a much more competitive market, which is only a good thing for consumers."

However, some analysts are questioning whether O2, having lost exclusivity, can hold on to its valuable iPhone customers. "When Telia lost its iPhone exclusivity deal in Denmark, it discounted its existing contracts by between 30% - 40%. We could see a similar strategy in the UK," said John Strand of Strand Consult. "But, the deal is in line with Apple's distribution strategy which is to increase its distribution power. But it leaves O2, Orange and Vodafone to battle it out as to who can offer the cheapest iPhone. This will trigger a price war, and the only winner will be Apple."

Geoff Blaber, an analyst with CCS Insight, added further insight believing that Orange would need to apply competitive subsidies to gain market share. "O2 has had the iPhone for a long time and Orange will not get anywhere near the same increase in subscriber growth as O2 unless it can price it more competitively."

Blaber did not foresee a mass migration of O2 subscribers to Orange or Vodafone, in the short to medium term. "Most are tied into long term 18 month to two year contracts, many of which will have been recently renewed."

Taking a different angle, Neil Mawston, a director at Strategy Analytics, said the deal would impact most severely on other handset manufacturers. "This will put other handset vendors such as Nokia, Samsung and LG under competitive pressure, but particularly the less established smartphone vendors such as HTC."

For more on this story:
The Guardian and Mobile Today