Orange forms alliance to take on Vodafone. (Wireless News Review).
While all have strength in their home markets, they do not have Vodafone's breadth. France Telecom subsidiary Orange SA, which has a presence in the French and UK markets, said that the new alliance will enable it to offer new and familiar services to its customers in countries where it does not have a presence. While the deal initially covers Europe, it could be extended to the US, where T-Mobile has a presence and South America where Telefonica is strong.
The alliance is the centerpiece of a new strategy outlined by Orange's new CEO Sol Trujillo who said the company was on target to meet guidance of 5% revenue growth this year with earnings at the EDITDA level of 6.2bn euros ($9.1m).
The company has even more aggressive targets for the future and wants more rapid revenue growth in 2004 and 2005 with earnings at the EBITDA level rising between 15% and 17% from 2003 And 2005.
Orange wants to build its footprint in the Eurozone, which includes countries joining the EU up to 2007. It wants all its national operations to be EBITDA positive this year and operating free cash flow positive by 2004. By 2005, the target is to be number one or two in each country or have a market share of more than 20%.
Trujillo claimed it was a "myth" that Orange was slowing down investment as a result of the cash requirements of debt-ridden France Telecom, which owns 87% of the mobile operator. "I wouldn't be standing here otherwise," Trujillo said. "In my opinion, Orange is the crown jewel in France Telecom's assets... You feed those sort of vehicles, as opposed to starving them."
Orange's credibility will only be established when it can produce figures to show that Trujillo's strategy is working. The company, which established the "coolest" reputation amongst UK mobile operators, has recently produced an advertising campaign that has been the subject of widespread ridicule. This raised fears that a company majority owned by an incumbent telco that is itself controlled by the French government, can ever show the zest necessary to perform in a competitive free market.
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|Date:||Jun 26, 2003|
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