Orange delays 3G roll-out and axes 1,500 jobs

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France Telecom unveils €30bn rescue

Orange delays 3G roll-out and axes 1,500 jobs

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The mobile phone operator Orange yesterday confirmed its chief executive, Jean-Francois Pontal, would retire next spring as it announced further delays to the roll-out of its third-generation mobile phone services.

The company refused to name a successor for M. Pontal, who turns 60 in April, until next year. But the battle for his post has begun with Graham Howe, the deputy chief executive and chief operating officer, and Didier Quillot, the head of Orange's French business, as the lead candidates.

Mr Howe said Orange planned to "soft-launch" its 3G service in the UK next year, with a full commercial launch slated for 2004. "It [the UK] is going to be the test market for 3G as far as we're concerned and the other markets [in Europe] will follow after the UK," he said.

As a result of the delay as well as other measures to make the business more efficient, Orange's capital expenditure over the next three years will now be more like €8bn (£5bn) compared with the previously stated €11bn.

That €3bn saving alongside operational improvements mean the operator will generate some €5bn to €7bn more net cash flow during the same period than current market expectations.

But analysts think Orange is under pressure to cut costs to help support its debt-laden parent France Telecom (FT). "Orange is positioning its statement as a reflection of its own improving financial performance. In reality, it appears more like it is being aggressively squeezed by its parent in order to support FT's refinancing," analysts at Cazenove said.

Mr Howe stressed that Orange remained confident about sales growth. "We're just as optimistic as we were on revenues. We're just as optimistic on the use of 3G technology but we think it's going to be later."

Orange expects about 1,500 staff to have left in the two-year period to the end of 2003, but insists that hardly any of these losses are redundancies.