11/1/2006 9:38:00 AM
Orange’s smash & grab Q3
Orange has had its best quarter for contract connections in five years, thanks to a combination of putting more money into its animal tariffs and T-Mobile's relative lack of activity.
But anyone counting on more of the same from the operator in the run-up to Christmas is likely to be disappointed, as the operator has slashed commissions this month. Up to £50 has been taken out of consumer packages, while b2b has been hit even harder.
Orange's connections surge was helped by its free broadband deal, which was bundled with contract tariffs, although take-up is believed to have been moderate. The operator connected 187,000 contract customers between July and September, taking its base to 15.14 million, of which 33% are now contract customers.
Although Orange put more value into its animal deals in July, sources close to the operator said T-Mobile's de facto withdrawal from the market was as big a factor. Commissions on T-Mobile's deals plummeted in July and it started charging its customers to upgrade, making retailers and customers look to another network.
Orange also reported a drop in its revenue and ARPU from the same period last year, prompting concerns that it was bringing in less money, but it had the additional cost of offering free broadband. The company has privately attributed the drop in revenue to its inactivity in previous quarters, and is expecting a sharp rise as the money from the record number of new customers it has recently signed up flows into its coffers.
Orange will also have to account for the additional cost of acquiring 50 of The Link stores in its next report.
The company is under pressure to bring more connections through its direct channels, with the goal of going from 35% direct for contract connections to 50% to bring down its costs and cut churn.
Brakes on in November
Typical Orange commission packages for new connections have been trimmed by between £25 and £50, according to the latest bulletins from distributors. Some business deals have been hit harder, with some upgrade commissions between £30 and £100 lighter than the previous month.