Orange to buy chunks of talk time in Europe

ORANGE, the mobile-phone operator, is hoping to launch a service in continental Europe by buying large chunks of call time from established mobile-phone operators.

Hans Snook, Orange's managing director, yesterday said the company was in talks with major mobile-phone operators in France and Germany about the idea. Orange would buy billions of minutes of mobile phone airtime - at a likely cost of hundreds of millions of pounds - over 10-year period, effectively giving it access to a virtual network in both countries. The deal would allow Orange to introduce its own tariffs and extend its brand name.

Meanwhile, he said the network operator who carried the calls would enjoy guaranteed revenues over a long period. "They could take the deal to a bank and use it borrow money at a very cheap rate," said Mr Snook. "They could then use that to improve their network."

However, he warned that a deal was still some way off, but the move would allow Orange to make up some of the ground it has lost on competitors such as Vodafone, the UK's largest operator. By joining bids for mobile licenses in countries in Europe and elsewhere, Vodafone has built up an extensive world network.

Mr Snook added that Orange could also force its way into the continental European market by linking up with existing operators to bid for third- generation mobile licenses.

The licenses, to build networks capable of offering access to the Internet and videoconferencing from a mobile phone, will be auctioned over the next few years.

The government is likely to auction third-generation licenses next summer. As they are likely to be based on a single standard, the phones could easily be used across borders.

Meanwhile, Orange yesterday vowed to continue improving the standards of its UK service. Mr Snook said the company would next year begin a campaign to encourage people to replace their fixed-line phone with a mobile phone.

Later this year, Orange will launch Daily Talk service, designed to tempt people away from their existing phone lines by offering 20 off-peak call minutes a day for just 50p.

Orange yesterday also reported its first-ever operating profit, making pounds 2.2m in the six months to June compared to a pounds 39.9m loss in the same period last year.

The company also impressed investors with the disclosure that the average amount spent per year by subscribers had barely fallen, even though Orange has cut its prices and launched a discount pre-pay mobile phone service.

The shares closed up 45p at 795p.