Global Economics

Orange Boss Revels in Recent Successes


The CEO of British mobile operator Orange scored two coups in September—rights to the iPhone and a merger with T-Mobile—and he's pumped

As Jenson Button was securing the Formula One world championship last weekend, it was hard for Tom Alexander not to feel a pang. Orange's chief executive is a racer at heart, who always saw a job in industry as a stop-gap. "I really identify with Jenson," he says. Both are Somerset lads with a thirst for speed, and both were crowned European karting champion.

Mr. Alexander now looks to set the pace in the mobile industry, after his racing career stalled. "It is very tough. Only a few make it," he said.

While he still uses competitive racing as a way to relax, recently the day job has been getting in the way of his passion. Mr. Alexander pulled out of the Goodwood Festival of Speed in July at the last minute, saying he was "too distracted" to compete. No wonder. He was in the latter stages of brokering a deal to break O2's hold on the iPhone as well as masterminding the tie-up with T-Mobile UK (DT); a merger that would create the leading mobile operator in the country.

Mr. Alexander is more relaxed as he talks through a momentous month in the company's history, with the iPhone win at the end of September still fresh. "We are already benefiting from the mystique and PR machine of Apple (AAPL)," he said.

It is understood that half a million customers have already registered to snap up the device when it becomes available in the next few months. "I was gobsmacked how many people signed up straight away," Mr. Alexander said. Secret negotiations to secure the device had been going on from "a very early stage" in Mr. Alexander's reign, he admitted, adding the deal had been "in the bag" for months. He said: "When I first came to Orange, O2 (TEF) had just signed the exclusive deal for the iPhone in the UK. I was always keen to get it, I saw it as a crucial development."

The timing of the announcement seems no coincidence as Orange builds momentum going into the Christmas season. O2 has sold more than a million iPhones since the device launched exclusively on its network in the UK in November 2007. Opening it up to Orange—and Vodafone (VOD) next year—will almost certainly spark a price war. Orange believes the strength of its wireless network, which is one of the most comprehensive in the UK, will also prove critical to luring customers.

As someone who helped to mass market mobiles during the 1990s at Virgin Mobile, Mr. Alexander clearly believes the next revolution will be the mass adoption of smartphones, such as the iPhone, which combine voice and texting with internet services, email and applications. Smartphone sales have grown in the downturn, at a time when the operators have remained resilient. With 409 million smartphones sold between April and June, they only accounted for 14.3 per cent of sales, but sales are growing.

"This Christmas will be a key push in the smartphone market, with the iPhone 3GS at its core. Many more people will go and get them. If it wasn't for the recession the smartphone revolution would have already happened." Mr. Alexander said.

Getting the bit between his teeth, he moves on to a subject close to his heart; the mobile phone as an instrument for change. "The mobile has changed society around the world. And we're on the edge of the next evolutionary or even revolutionary step," he said: "These devices will change society and being part of that is hugely motivating."

Mr. Alexander said he is an enthusiast for the industry. "I love doing new things and I have the energy for them." He describes his style as similar to Branson at Virgin, the man who backed his idea to launch the first mobile virtual network operator—a mobile company that doesn't run its own network—with an investment of just £15m in 1999. The business attracted five million customers, before it was taken public and sold to NTL. "With Virgin Mobile we helped bring the mobile phone mass market. Before, it was a corporate tool, or for a select few. Virgin democratised the mobile and made it available to everyone." He remembers the time as "very much work hard, play hard. There were loads of parties; I don't really remember many of them."

Mr. Alexander retired from Virgin in 2006. A year later he was called into a meeting by Didier Lombard, chairman and chief executive of France Telecom (FTE), who wanted to tempt him out of the self-imposed retirement and resuscitate the French group's floundering UK business.

Mr. Alexander said his entrepreneurial and laid-back style was by no means a shoe-in for an operation hamstrung by bureaucracy and an overbearing parent. He said: "It was quite a different challenge. I asked: 'Are you sure you want me?' It was a pretty brave decision from their point of view." He demanded free reign. "They gave me the freedom and it has produced results. They have been fantastically supportive."

He took the company back to basics. "It was about the fundamentals. We put in the best network, retailers and service. We changed the business fundamentally."

He was given the target of making Orange the largest player in the UK by 2012, a big ask given its 22 per cent market share compared unfavourably with Vodafone's 25 per cent and O2's 27 per cent.

Three years before the deadline, and Mr. Alexander looks set to pull it off. The group announced at the beginning of September that it had seen off counter-offers from the two biggest players in the market to buy T-Mobile UK, the country's fourth player with 15 per cent of the market, and agreed a 50:50 joint venture. The group is set to sign the deal at the end of the month and then will await approval from the regulators to become a national champion. Was the key to dominating the market always a merger? "There were a load of strategic scenarios and this was one of them," Mr. Alexander answered. He continued: "I was attracted out of retirement as it was clear Orange and the market were set for revolution. It was clear there would be a consolidation of network infrastructures and a consolidation of companies. Businesses are looking at how to evolve in an industry facing regulatory pressure, decreasing margins and huge competition."

Mr. Alexander seems calm about the challenges facing Orange, and hopes he can spend more time behind the wheel of his beloved Aston Martin DB4, once driven by Peter Sellers. "My only concern is there aren't enough hours in the day. It is not about money, it's about time," he said. "The trouble is getting enough time to sleep."

Tom Alexander: CEO of Orange

* Mr. Alexander, 50, is married with two children.

* He took up karting in his teens and still races semi-professionally.

* He joined Key Pneumatics in 1978, moving to mobile group Telia in 1986.

* He launched Virgin Mobile with Sir Richard Branson in 1999.

* Was appointed chief executive of Orange in January 2008.


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