and MARY FAGAN
Orange, the mobile telephone company, and NatWest are planning a joint credit card venture. An Orange-branded Visa card, administered by NatWest, could be launched later this year.
A letter of intent has already been signed for the venture, which would offer Orange marketing access to NatWest's existing six million credit card holders as well as allowing the mobile operator to offer an additional service to its customers. NatWest would gain in return access to Orange's 450,000 subscribers and the benefit of its strong brand image on the card.
The move follows the announcement last November of a joint venture between Cellnet and Barclaycard. Cellnet subscribers can get basic financial services over the airwaves, and the system will evolve to give access to more sophisticated services through a menu on the mobile handset.
The huge success of Orange's assault on the mobile phone market since its launch in April 1994 has prompted the two dominant operators, Cellnet and Vodafone, to retaliate with what appears to be the beginning of a price war. Competition on the sophistication and quality of service is also fierce.
The new Orange credit card - described by one of those involved as ``a very interesting idea'' - will offer an attractive interest rate. Competition in the credit card market increased recently with the launch of new, relatively low-interest card by RBS Advanta - a joint venture between Royal Bank of Scotland and US-based financial service company Advanta - last month.
NatWest is one of Britain's biggest card issuers, along with Barclays, the market leader, TSB and Midland. Low-interest card issuers such as the Co-op, RBS and Halifax have a small market share.
Orange plans to float on the stock market later this month and has already registered almost 60,000 people as potential investors. The listing is expected to value the company, owned by the Hong Kong conglomerate Hutchison Whampoa and British Aerospace, at pounds 2.2-pounds 2.4bn.
Orange has launched a pounds 5m advertising campaign ahead of the flotation, and has spent about pounds 14m a year on advertising and marketing since its launch in early 1994. It has firmly established its name in a market originally dominated by Vodafone and Cellnet, running neck-and-neck with Mercury's One-2-One service. Orange says it is capturing nearly a third of all new subscribers to mobile telephony and 38 per cent of all new customers on digital networks, where the future of the industry lies.
Analysts reckon that Orange will move into profit in 1997, and that it could have a quarter of the mobile-phone market by the end of this decade.
The company holds much of the credit for taking mobile phones out of their yuppie niche into the mass market. It is likely to start making a bigger impact in the business market, in which Vodafone and Cellnet still figure strongly, as a recently announced deal with a German network will allow Orange users to use their telephones elsewhere in Europe.Reuse content