O2 not really losing out, says analyst

Orange has beaten O2 in an auction to decide which operator provides roaming services for 3 users when they are outside the 3 network.

The 3 network provides coverage for voice, text and 3G mobile media services only to 88 per cent of the UK population.

Under the terms of the agreement, when 3 customers are outside those areas, they will roam onto the Orange network for voice calls, text and MMS, and access to GPRS data services.

3 held an evaluation period to look at which suppliers could handle the service, before inviting those that met the requirements to register for the auction.

"Orange tendered the most competitive bid for the supply of voice, text and data services and has been selected as the preferred national roaming provider for 3 from the end of 2006," said a statement by 3.

Bernard Ghillebaert, executive vice president at Orange UK, added: "The Orange network is renowned as one of the most robust and reliable networks in the UK and it makes commercial sense for us to utilise this asset within the wholesale market."

However, industry analysts maintained that the loss of the deal would not damage O2 significantly.

"O2 finds no value in being the roaming partner because 3's network now extends out to most of the UK," said Pranab Mookken, senior industry analyst at Frost & Sullivan.

"I agree that whatever value is there comes in as extra money, but it is not as much as when O2 first partnered with them in 2000. O2 now provides its networks to other mobile virtual network operators."

The deal will come into force later this year, and 3's 15 million customers will continue to use 02 until that time.

3 customers' handsets will then automatically select the Orange network for roaming, although they will still be able to roam on O2. By 2007 all new 3 customers will only roam on the Orange network.