It’s not surprising that Orange wants its Swedish license requirements cut. Under the current terms, it must spend $2 billion on roll-out before the end of 2003; as a new entrant, it’s unlikely to have more than a handful of customers by then. Never mind regulatory easing – Orange Sweden could well be the next operator to follow Germany’s Quam into oblivion.
Orange has asked regulators to relax the terms of its Swedish 3G license.
Mobile operator Orange has asked the Swedish Post and Telecom Agency to extend its deadline for 3G roll-out in Sweden, and to relax the terms of its license. Instead of rolling its network out to 8.86 million people by the end of 2003, it wants until 2006 to reach 8.3 million people.
Orange says the current licensing arrangements are invalid because after missing out on a license, incumbent telco Telia teamed up with rival bidder Tele2 to share a network – leaving five mobile operators in a relatively small market.
Sweden sold its mobile licenses for just $125 per head of population – far below the $599 figure for the UK – in exchange for promises to meet strict targets. The country wanted to become a world leader in mBusiness; this suited the mobile operators, who expected Sweden’s high mobile penetration to translate into mobile data use.
However, this has not happened with WAP or GPRS, and Europe is unlikely even to see fully functioning 3G handsets before spring 2003. Since the investment required to meet the original conditions is around $2 billion per operator, it’s no surprise that Orange wants a delay.
But is that enough? Orange is a new entrant in Sweden, and winning customers from existing operators, including Vodafone, will be hard – especially with competition from the other new entrant, Hutchison Whampoa’s HI3G. Hutchison is launching new entrant 3G services across Europe, has a strong marketing team (including many of the people who set up Orange), and has established close relationships with 3G handset manufacturers.
Orange’s main asset in Sweden is its brand – but this will not be enough to make it profitable as a new entrant. Unless it can ally or merge with a rival (and HI3G and Vodafone will not be interested), Orange should consider abandoning the country altogether.
Related research: Datamonitor, Global Mobile Devices (DMTC0777)
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