Orange's pounds 800m plan for new services aims to 'leapfrog' rivals

Orange, the UK's newest mobile phone network, yesterday unveiled ambitious plans to double its investment programme, spending an extra pounds 400m through next year to improve signal coverage.

Hans Snook, group managing director, claimed the move, which would raise Orange's investment to pounds 800m between now and early 1999, would remove the biggest barrier to expanding British mobile phone ownership. He said research had shown 58 per cent of customers who left mobile networks did so because of weak signal strength.

Mr Snook claimed the accelerated investment programme, bringing forward spending originally scheduled for 2000 and beyond, would leapfrog expansion plans from Vodafone, Cellnet and One 2 One: "The primary factor that raises satisfaction is not price, it's coverage. We intend to set the agenda for the wire-free future."

He also unveiled plans for new services, including a high-speed data offering to allow customers to access the Internet and mobile handsets to replace telephone extensions in offices. Orange is also working with a UK university to develop a mobile phone which can send television pictures.

The UK mobile phone market has become increasingly competitive over the past year as the four operators have stepped up advertising campaigns. But subscriber growth in recent months has been more modest, particularly for market leaders Vodafone and Cellnet, as customers have left the networks. UK mobile phone ownership, at 13 per cent of the population, remains well below the 25 per cent and above in Scandinavia.

The spending will increase the number of Orange signal stations from 2,900 to 6,000, filling in gaps between buildings in urban areas and improving coverage in the countryside.

Orange said it would raise its coverage from 95 per cent of the UK population to 98 per cent. By the end of 2001 the company said it aimed to have 10,000 base stations.

The company indicated it intended to build the new sites more quickly to avoid potential conflicts with the Department of Trade and Industry, which has become concerned at their environmental impact. Orange is experimenting with base stations disguised as trees, though so far only two are operational.

Mr Snook said the investment, which would take Orange's total spending to more than pounds 1.6bn, would be financed out of the group's existing resources. However the group is negotiating with its bankers to refinance its pounds 1.2bn of borrowings at a lower interest rate, reflecting the company's improving financial performance.

So far pounds 870m of the facility has been drawn down, with pounds 330m left for future projects. The loans are about 1.5 percentage points above short- term money-market interest rates.

Mr Snook said recent rises in interest rates would not make it harder for Orange to fund its investment. "We're very well hedged into the future on interest rates and the fact that we may negotiate a larger borrowing facility doesn't mean it'll cost it more unless we draw on it."

Analysts yesterday welcomed the plans, but warned that the interest rate hikes made it harder to put a value on the group.

Orange shares, which rose 8.5p yesterday to 220.5p, have underperformed the stock market by 30 per cent since the flotation in March 1996 at 205p a share.

Jim McCafferty, from stockbrokers ABN Amro Hoare Govett, said: "The management at Orange is very credible, but the higher interest rate environment could put the company's valuation under pressure."

Orange shares were also boosted by figures from the company showing a 13 per cent surge in average annual revenue per customer to pounds 500. Its subscriber base grew by 195,000 in the first half of the year, giving it 35 per cent of the increase in the market. Last month Orange signed up its millionth customer, raising its overall market share to 13.3 per cent.

Orange yesterday revealed a 41 per cent drop in losses in the first half of the year, to pounds 74m, with turnover up 67 per cent to pounds 427m. The group repeated its forecast that it would become profitable in 1999.

New mobile services

Video phones

Internet browsing

Home shopping

On-line newspapers

On-line financial services

Narrow-band television

Virtual banking

Conference calling for up to six people at one time

Roaming phones connected to office switchboards

Link-up with high-speed digital data service (ISDN)

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific