The UK’s third largest mobile phone operator, Orange Plc, has finally acknowledged what everybody else has known for months: that its geographical coverage is sub-standard and extremely annoying for its subscribers. But the company’s trendy image, ably supported by clever marketing and a well differentiated set of air time agreements, has helped it to turn in interim figures which were at the optimistic end of city expectations. Net losses for the six months to June 30 have been cut to just 73.5m pounds from year ago losses of 125.2m pounds with revenues rising 66.4% to 426.9m pounds. Orange shares were up 6.5p to 218.5p on the news that the group well on course for full profitability by 1999. The company is claiming the lowest churn rate in the industry at 19.9% (although Vodafone Group Plc disputes this claiming just 15% for its GSM network) insisting that this gives them the advantage of a loyal customer base. But in a recent survey of subscribers leaving the Orange network, 58% said that poor coverage was the reason for cancellation, and the company has finally decided to do something about the inadequate number of base stations it operates. A fund of 800m pounds has been pledged for the expansion of the network, twice the previously existing budget. Base stations will be increased in number from the current 2,900 to around 6,000 between now and the end of 1999. Commenting on the plan, managing director Hans Snook said We now intend to lead the market by ensuring that Orange is the network that clearly and consistently gives significantly better wirefree coverage. While this is an admiral sentiment, it’s unlikely that rivals Vodafone and Cellnet will be happy to surrender such a key competitive advantage to a relative new comer. Vodafone currently operates 3,000 base stations on its digital network, but achieves a far better reliability of coverage per site due to its operational frequency (GSM 900 vs. Orange’s GSM 1800). Vodafone has plans to spend 240m pounds this year on an extra 1,400 stations, with the added advantage that it can piggy back the new equipment onto existing analog cell sites, making the expansion process cheaper. But despite the drawbacks of the Orange network, it claims to have added 195,000 new customers in the first half and insists its growing faster than the market, with UK market share up two points to 13.3% from December.
