2nd UPDATE: Orange To Sell iPhone In UK, Ends O2 Exclusivity
September 28 2009 - 11:30AM
Dow Jones News
France Telecom SA's (FTE) Orange 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, customers and average revenue per user, and catapulted the
operator ahead of rival Vodafone Group PLC (VOD) into first place
as the largest mobile network in the U.K. by subscriber
numbers.
This first mover advantage won't be quite so strong for
second-comer Orange, according to Geoff Blaber at CCS Insight, not
least because 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.
Blaber believes Apple's move away from exclusivity means the
remaining network operators, like Vodafone in the U.K., are likely
to be in negotiations to sell the iPhone here, 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.
Vodafone has previously expressed interest in stocking the
iPhone.
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 said it was happy with the Orange deal and added that it
also has an excellent relationship with AT&T which "we are very
happy with." An Apple spokesman declined to comment further on its
exclusivity plans for Germany and the U.S.
The iPhone's launch in 2007 heralded a new benchmark for
touch-screen mobile phones and spawned an industry of mobile phone
applications for sale and download from a host of vendors.
Apple Monday said more than two billion applications had been
downloaded from its own App Store since it launched just over a
year ago, and there are now more than 85,000 online applications
available.
Although an exact date for the launch of the iPhone on Orange's
U.K. network was not revealed, a spokesman for Orange said it 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.
-By Kathy Sandler, Dow Jones Newswires; 44-207-842-9293;
kathy.sandler@dowjones.com