Orange makes European push

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The Independent Online

Industrial Correspondent

Orange, the mobile telephone company set for flotation next month, is poised for a big breakthrough in its service, allowing customers to use their telephones in other European countries, starting with Germany. The operator is expected to announce a "roaming" deal with E-plus, a large German network, to be followed later by an agreement in France.

The move is a significant boost for Orange, owned by Hutchison Whampoa of Hong Kong and British Aerospace. The ability to roam, attractive to higher-paying business customers, is already available on the entrenched Vodafone and Cellnet services from which Orange is trying to win market share.

The move emerges as Orange launches a pounds 5m advertising and marketing campaign in the run-up to March. It is emphasising its coverage, now at 90 per cent of the population. The campaign covers availability of the service in places ranging from large towns and cities and to the rural likes of Snodland near Rochester as well as Ozleworth, Pott Shrigley and Pontop.

The flotation, for which the exact date is yet to be set, is expected to be worth up to pounds 2.8bn Orange has 410,000 subscribers out of a total market of 5 million. However, from a standing start it has grabbed a quarter of the much faster growing digital cellphone section of the market, which will eventually account for most of the mobile telephone business.

Orange's advertising offensive marks the latest stage in the mobile wars. Vodafone and Cellnet have recently announced plans to cut prices and to follow Orange's practice of offering billing by the second and packaged "free" call minutes for a given monthly subscription fee.

The move by the larger companies is widely seen as an attack on the mass consumer market where the Orange approach has been popular.

Orange has no plans to further cut its prices at present, claiming the overall deal for customers is still cheaper than its two main rivals.

It says it has the edge with extras such as a low-cost answering service and free display of the telephone number of incoming calls.

Orange declines to comment on its financial or market position. However, the consensus among City analysts is that it will be profitable at the operating level in 1997 and could have a 25 per cent market share by the end of the decade.

The company is also hoping that its fortunes will be helped next year by number portability which will allow people to keep their numbers when they switch between mobile operators.

Orange's growth over less than two years since the launch of the service in April 1994 has taken the City by surprise, partly because the track record of Hutchison in the United Kingdom had been poor.