"The rebranding can be done, but it will cost a lot of money. They [France Telecom] must have come to the conclusion that it's a good move."
Ondrej Datka, Patria Finance analyst
Globtel and France Telecom executives explained the decision to change brand names September 13.
photo: Courtesy Globtel
Majority-owned by France Telecom, which in August last year acquired the Orange group, Globtel is Slovakia's market leader in terms of client numbers, its just under one million clients exceeding those of rival Eurotel by nearly 300,000.
Membership in the Orange group, and the subsequent change of the Globtel brand name to Orange, will give the company the backing of one of the most powerful and technologically advanced telephony groups as it prepares for both the entry of a third operator onto Slovakia's mobile market, and its own acquisition of a 'third-generation' UMTS phone licence next year, Globtel and Orange executives said.
"In regard to the UMTS licence, this [joining Orange] is one of the most important factors for us. Operators all over the world are looking at UMTS, but in reality, not many will be able to survive without cooperation, and this [membership in Orange] will give us a real chance to develop [this] new technology," said Globtel's general director, Pavol Lančarič.
However, Lančarič refused to speculate on what effect the move might have on Globtel's battle for market share with Eurotel, now owned by Deutsche Telekom through its August 2000 acquisition of fixed-line monopoly Slovenské telekomunikácie.
"It's difficult to tell how this will affect competition. Eurotel is a very strong competitor, whom we will never underestimate. We would like to surprise our competitors, though, and we have plans, which unfortunately I cannot go into now, but which will be unveiled very soon," he said.
Lančarič also refused to disclose how much money the rebranding would cost, but stood by Orange and France Telecom representatives' assurances that the change of name would be successful.
"We have our financing plans," the Globtel chief said. "I cannot define the costs [of rebranding] now, but there will be significant returns in synergies."
The rebranding process, expected to take anywhere between one and two years, will involve the gradual phasing out of the Globtel name to be replaced by Orange. Some analysts have questioned whether or not giving up the Globtel name would yield the rewards that Orange and Globtel believe.
"Will the benefits of rebranding outweigh the potential costs of losing the Globtel name? Orange is a well known brand across Europe, but will this have any effect on users in Slovakia? They [France Telecom] must have come to the conclusion that it would, and that it's a good move to change the brand," said Ondrej Datka, telecoms analyst at Patria Finance in Prague. "The rebranding can be done, but it will cost a lot of money."
A similar situation in the Czech market, which is twice the size of Slovakia's, has seen Deutsche Telekom, which owns Czech mobile operator RadioMobil, rebrand some of its services to T-Mobile, but also keep, in parallel, its Paegas mobile service. However, it is believed that no such parallel branding would be adopted by Globtel.
Slovakia's two mobile phone operators have been battling for dominance in the five million strong Slovak market since Globtel began operations in 1997. Since then, both companies have shown rapid growth in client numbers, with Globtel edging ahead of its competitor to take a roughly 60% share of the country's mobile market at the end of June 2001.
A third operator is expected to be granted an operating licence by the middle of next year, with a tender for a combined UMTS and GSM mobile licence expected to be completed by the end of the first quarter of 2002, the government has said. Both Eurotel and Globtel will be awarded UMTS licences at the same time.
Orange executive vice-president Simon Cartwright said that Globtel's membership in Orange, the world's second largest mobile operator group with more than 36 million users, would offer a number of new services to Globtel users through the group, including some of the newest products in telecoms.
Lančarič added: "As well as the synergies we can achieve we have the chance to be there when something new comes into the world of telecoms."
24. Sep 2001 at 0:00 | Ed Holt