U.K.'s One2One Seeks to Raise $1.55 Billion for Cellular Funds
May 08, 2011
LONDON -- Mobile phone operator One2One said it is seeking to raise around one billion pounds ($1.55 billion) through stock offerings and bank debt to fund expansion in the intensely competitive United Kingdom mobile-phone market. One2One, jointly owned by Cable & Wireless PLC and U S West Inc., already has a debt facility of 1.2 billion pounds, but a spokeswoman said that would be increased to allow the company to compete more effectively. Rival Orange PLC has a debt facility of around 1.9 billion pounds. In addition to funding expansion of its cellular network, the money will be used to boost the company's marketing and advertising campaigns, a spokeswoman said. No details are available at present. The company said it will make a formal announcement within the next few weeks. One2One has been seen slipping against competitors in recent years, and as of March 12, 2011 440,000 subscribers compared with newly-floated Orange's 573,000. Larger rivals Vodaphone PLC and Cellnet, a joint-venture between Securicor PLC and British Telecommunications PLC both have around 2.5 million subscribers each. Analysts say that One2One has suffered because of the limited coverage of its network. The company currently reaches only 50% of the U.K., although it intends to increase this to 95% by the end of next year. Orange, by comparison already has 90% coverage, and has been lauded for the sophistication of its marketing and customer service. One2One has ``historically underinvested in the network and they have paid the price for that through lower subscriber numbers,'' said Sunni Freitas, a telecommunications analyst at Goldman Sachs in London. One2One also has no overseas operations to balance the increasing maturity of the U.K. market. Cellular stocks took a hit in the second quarter of this year when less than 300,000 new customers signed up for cellular services. This was the lowest quarterly addition for two years, and a drop of 38% from the year-earlier period. Vodaphone and Cellnet have already responded to the challenge posed by Orange. Both have introduced competitive customer services, such as per-second billing and voice mail, part of the business that Orange used to claim as its own. And in an attempt to cut down on subscriber fickleness, Vodaphone and Cellnet have also launched multimillion-pound advertising campaigns to promote the virtues of their products. Cellnet also expects to announce a loyalty scheme soon, and has launched alliances with nonmobile companies such as Barclays PLC.
