UPDATE: Orange To Sell iPhone In UK, Ends O2 Exclusivity
September 28 2009 - 8:14AM
Dow Jones News
France Telecom SA's (FTE) Orange mobile business said Monday
that it has reached an agreement to sell Apple Inc.'s (AAPL) iPhone
in the U.K. later this year, bringing to an end a two year
exclusive contract held by rival Telefonica SA's (TEF) O2 mobile
network.
O2's exclusive deal with Apple has helped the company to boost
sales and average revenue per user, extending its lead as the
largest U.K. mobile network in the U.K. despite the recession.
This first mover advantage won't be quite so strong for
second-comer Orange, according to Geoff Blaber at CCS Insight, not
least becuase the price has fallen in the two years since the
original iPhone launched. However, Orange now has an opportunity to
lure high-spending customers onto its network if the company is
prepared to compete with O2 on price.
"If they decide to put a greater subsidy on the handset than O2,
that could be a valuable tool to drive subscriber growth and
attract customers from other networks," Blaber said, although that
growth comes with higher subscriber acquisition costs.
No details of Orange's pricing or tariffs were released. O2
currently offers the highest specification iPhone 3GS on a sliding
scale from GBP274 for the lowest tariff 18-month contract to free
on the highest tariff 24-month contract.
Although an exact date for the launch was not revealed, a
spokesman for Orange said the iPhone would be available by
Christmas.
The network will sell both the original iPhone 3G model and the
latest iPhone 3GS version, which was launched in June and which
offers a faster service with added features.
At launch, the new iPhone proved so popular that O2 sold out of
the device, and the problem was compounded by a supply-chain issue
during the early stages of the rollout.
These issues have now been resolved and right now the only item
unavailable is the white iPhone 3GS, although the black version is
in stock, an O2 spokesman said.
Commenting on the loss of exclusivity, the spokesman said the
iPhone will continue to be available on the O2 network even after
Orange starts to sell the device.
"We have well over one million customers with an iPhone, and a
strong relationship with Apple which will continue," he added.
Vodafone Group PLC (VOD), meanwhile, the U.K.'s second largest
operator, has previously expressed interest in stocking the
iPhone.
Blaber believes Apple's move away from exclusivity means the
remaining network operators are likely to be in negotiations to
sell the iPhone in the U.K., as well as in Germany, where Deutsche
Telekom (DT) has an exclusive agreement, and in the U.S. where
AT&T Inc. (T) is the sole supplier of the device.
A Deutsche Telekom spokesman said: "We have a long-term
partnership [with Apple] that will last for several years."
AT&T declined to comment on its deal with Apple Monday, but
is trying to extend its partnership beyond 2010, when its exclusive
rights reportedly would end.
Apple declined to comment further than Orange's
announcement.
-By Kathy Sandler, Dow Jones Newswires; 44-207-842-9293;
kathy.sandler@dowjones.com