Former Virgin Mobile Exec Takes Over As Boss of Orange UK

PARIS -(Dow Jones)- France Telecom has announced that Tom Alexander will replace Bernard Ghillebaert as head of its Orange UK business, as the French telecom giant seeks to improve the performance of its Orange brand in the tough British market.

Alexander, a former chief executive of Virgin Mobile in the UK, will take up his new role in December while Ghillebaert will become France Telecom's executive vice president of sales and customer experience, France Telecom said in a statement.

The challenge facing Alexander will be to return some sheen to the Orange brand in the country where it first gained prominence as an innovator under its founder Hans Snook, before being bought by France Telecom.

Alexander is "a positive appointment" by France Telecom, Mark James, an analyst at Collins Stewart said. "The original team at Virgin Mobile UK did a great job of growing the business and the brand, and Tom was obviously a big part of that," James said.

"The UK mobile market remains a tough one, and turning Orange UK around will be a challenging task," said James, who has a hold rating on France Telecom stock.

The UK business, France Telecom's biggest mobile-phone activity outside of France, has become a difficult market for the Orange brand in recent quarters. Tough competition between Orange and rival operators, such as Telefonica's O2 brand and Vodafone Group, has weighed on profitability.

At Orange UK's mobile business, the gross operating profit, which analysts consider to be equivalent to earnings before interest, taxes, amortization and depreciation, fell 6.9% to EUR712 million in the first half of 2007. In 2006, the business's gross operating profit dropped 17% to EUR1.37 billion.

Orange has also struggled in the UK broadband market, seeing subscriber numbers decline between the first and second quarters of 2007 amid fierce competition from BT Group, British Sky Broadcasting Group PLC and Carphone Warehouse Group.

According to the Financial Times, which was first to report Ghillebaert's departure Monday, the management shake-up followed a review of the UK business by Olaf Swantee, France Telecom's head of mobile operations in Europe and the Middle East. In his new position, Alexander will report to Swantee.

The change was welcomed by analysts at CM-CIC Securities in a note to investors. "The group has now solved its problems of management in its Spanish and British subsidiaries," the analysts said. CM-CIC has an accumulate rating on France Telecom stock.

At 1438 GMT, France Telecom stock was up EUR0.28, or 1.2%, to EUR23.87, against a 1.6% drop in France's benchmark CAC-40 index. The company will report third-quarter revenues and gross operating margin on Thursday.

By Jethro Mullen, Dow Jones Newswires; 33 1 4017 1738; jethro.mullen@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 22nd October 2007