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Orange plans to join mobile group

"We are entering a new stage of the mobile communications industry that requires a new model for growth."

Sol Trujillo, Orange's chief executive officer

Orange SA, Europe's third-largest mobile-phone company set new profit targets for the next two years and said it would join a pan-European cellular alliance to offer advanced wireless services in markets where it isn't now present.

Revenue will grow faster in next year and 2005 than the 5 percent expected this year, Orange said in a statement on PRNewswire.

Earnings before interest, tax, depreciation and amortization are forecast to rise by as much as 17 percent a year from this year to 2005 with the Ebitda margin approaching 40 percent in 2005.

Orange, which is 84 percent owned by France Telecom SA, will also join an alliance with three other European mobile operators as it seeks to expand its reach in Europe.

Orange will join Telecom Italia Mobile SpA, Telefonica Moviles SA and T-Mobile International AG to offer advanced messaging services on each other's networks.

"We are entering a new stage of the mobile communications industry that requires a new model for growth," Sol Trujillo, chief executive officer, said in the statement.

Trujillo, a former chief executive officer of US West Inc, was named head of Paris-based Orange in March, just as parent France Telecom began slashing costs to reduce its 68 billion euros (US$78 billion) of debt.

About 40 percent of those cuts are to come from Orange.

At the same time, Orange is trying to compete with Vodafone Group Plc in winning new customers who use more data services, such as e-mail and picture messaging, to boost revenue.

After having withdrawn from Sweden and announced cost cutting measures in Denmark and the Netherlands, Orange said yesterday that it is now focusing its "footprint" on the new euro region, including countries that join the currency union between now and 2007.

New alliances that will expand Orange's reach, without increasing spending, and new technology partnerships will be announced in coming months, Orange said.

The company has outlined strict guidelines that country operations within the group must reach or risk being divested.

Orange announced organizational changes that will help cut costs.

Orange expects operating free cash flow to increase by as much as 45 percent per year from this year to 2005 and have a cumulative operating cash flow of about 14 billion euros in the same period.

The phone company expects earnings before interest, taxes, depreciation and amortization of at least 6.2 billion euros this year and to add 2.6 billion euros of investment this year.
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