EUROPE: A dimmer future for KPN Orange

Thanks to the continually shifting pattern of alliances and takeovers in mobile telecommunications, one company is about to lose a major part of its appeal – to a competitor.

One of the more memorable advertising slogans of recent years must be “The future’s bright, the future’s Orange”. As part of a communications package developed by brand consultants Wolff Olins in conjunction with the ad agency WCRS, it has contributed greatly to establishing Orange as a major mobile communications brand.

In addition to the UK, the Orange brand has been seen to be transportable to other countries – such as Switzerland and Belgium – while maintaining an emotionally-driven positioning. As technological advances by any individual company become increasingly – even instantly – replicable, companies able to achieve such a branding advantage – such as Orange and, in the handset market, Nokia – will be best placed to defend their position as and when competing offers appear.

Imagine, then, as a member of the Orange marketing team, how you would feel if you were told you had to relinquish this competitive advantage, so assiduously (and expensively) built up. Worse, that a date had been set for this to happen and that you would have only 18 months to implement a changeover strategy. Worse still – and though legal and logical, nonetheless difficult to comprehend – imagine that you would be obliged to hand your brand name, and with it a substantial part of your accumulated brand equity, to one of your principal competitors.

Difficult, isn’t it? Yet this is exactly the situation in which KPN Orange, the third-largest mobile phone brand in Belgium, finds itself, as the result of a combination of takeover deals and European Union rulings. Before its takeover by France Telecom, Orange had entered Belgium by way of a joint venture with KPN, the Dutch telecommunications company. When France Telecom, having a presence already in Belgium through its Mobistar brand, sought control of Orange in December last year, the European Union ruled that the deal could go ahead only as long as it sold its target’s 50 per cent stake in KPN Orange. For its part, KPN Orange was granted the right to use its existing brand name until October 1, 2002, on which day ownership of “Orange” in Belgium would switch to France Telecom.

France Telecom could, should it so wish, continue to use the Mobistar brand in Belgium but this is unlikely, given the apparent logic of applying uniform branding across all of its mobile phone operations throughout Europe. In addition, a survey conducted last year found that, while awareness of Mobistar was high, it was perceived as rationally, rather than emotionally, strong.

In many ways, this is uncharted territory. True, recent experience shows that established brands – for example, Mars-owned Opal Fruits – can be supplanted by global alternatives without adversely affecting sales. Kellogg, on the other hand, encountered resistance when it sought to change the name of one of its breakfast cereal brands. In neither of these cases, however, did the brand in question hand its identity to its principal competitor, making this a case to watch with some interest.

John Shannon is president of Grey International

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