Orange joins phone tariff war

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The British mobile phone network provider Orange has announced a 66% price cut for its mobile phone services in a bid to compete with rival discount schemes.
 
The UK’s mobile phone business is becoming increasingly competitive as firms jostle to get more people to sign up to their products.
 
The cuts from Orange come just six weeks after Vodaphone cut its tariffs and a month after Cellnet introduced a new customer loyalty scheme offering tariff discounts. 

Under Tuesday’s announcement from Orange, off-peak calls will cost subscribers 5p a minute from July.

 
The company is also launching a new tariff scheme – Talk 30 – offering subscribers to the scheme 30 minutes of free calls, and a credit scheme which will refund customers for calls that are cut off.
 
Orange’s share price leapt on the news as the market welcomed the company’s efforts to stay competitive. At 14:19 Orange shares were 45p higher at 596 as analysts reacted positively to the tariff initiatives and bullish subscriber growth comments.
 
The company said the numbers of its UK subscribers were up 20% compared to the same period last year.
 
The Orange basic tariff compares to an off-peak rate of 2p a minute for Vodaphone and 10p a minute from One 2 One and Cellnet.
 
But One 2 One operates various special subscription schemes by which customers can get free calls at weekends or evenings, while Cellnet’s First initiative launched last month offers a range of discounts schemes from 3% to 15%.
 
A Cellnet spokesman said the schemes could cut customers tariffs to as low as 2p a minute.
 
Orange also revealed there would be further tariff cuts in its pre-pay service Just Talk in the autumn and a new scheme to attack the fixed-line market.
 
Doug Hawkins, analyst at Nomura, said: “Orange obviously has felt that it has lost some of the initiative to Vodafone, and these measures look fairly aggressive in terms of giving it a strong position and attracting new subscribers. The attempt to bring in wireline customers for the first time is particularly innovative.”
 
He said Orange was trying to target the single-person household, which is mostly fairly affluent. He added: “That represents a challenge to British Telecom. They are seeking to establish their position as the leading innovator in the UK mobile market and for the first time they are now trying to attract wireline users to consider mobile as an alternative.”