Orange has actually performed roughly in line with expectations, taking a 9 per cent market share by the end of June. It expects to take this to 11-12 per cent by the end of the year, in keeping with its own forecasts, if lower than some of the more bullish ones.
New industries are notoriously difficult to analyse. The only real indicators for mobile phones are the rate at which companies attract new subscribers, how many subsequently disconnect from the service (churn), and how much they spend on their phones. Sixteen million users are forecast for 2005, so the market is plainly there and the question becomes, which operators will carve out a profitable market share?
Orange still looks impressive. There was particularly good news on the churn front, which has dropped from 18.1 per cent to about 17.6 per cent since last year, the best performance among the mobile operators. Vodafone, by contrast, is stuck at 25 per cent and Cellnet at 28 per cent. Orange has also held ground on revenues per subscriber, which are static at about pounds 440 a year. For Vodafone, the figure has dropped to pounds 484 from pounds 520; for Cellnet, from pounds 403 to pounds 391.
The figures suggest that Orange has signed up a better class of user: reasonably heavy users, who pay on time. So why the share-price drop yesterday? Part of the answer lies in the normal volatility seen when a stock goes into the FT-SE 100. At the same time, some investors are betting that Vodafone has begun to take on the lessons of Orange - excellent marketing, brand loyalty - and have switched to the market leader.
One day, mobile phones will look like any other price-sensitive commodity. Until then there is a good run to be had if investors choose the winners. Orange is likely to be one and probably didn't deserve yesterday's fall.