Orange options

THE ORANGE mobile phone company is currently in the process of deciding what to do in Formula 1 next year with the options being to stay with Arrows, to switch to another team, to concentrate on trackside signage or to forget Formula 1 and look elsewhere. There are arguments for and against all of these options.

Staying with Arrows means that the company will be able to continue to build up the Orange Arrows brand and that it has a complete car which, if the cars appear on TV sufficiently offer a good branding opportunity. The downside of this is that Arrows has not performed very well and there has been very little TV coverage of the team.

The option of switching to another team means that all the work done so far on branding will be wasted although a switch to a more competitive operation would make sense in terms of TV coverage. The obvious choice is Renault Sport although the team cannot offer an orange car as it wants to use F1 to push the Renault company, with its yellow color scheme. Orange and yellow do not look good together although one option would be for the team to run yellow and black signage with orange on black, as is seen on the trackside signage bought by Orange. The Renault option is thought to be a likely one because of the connections between Renault and Orange, which is owned by France Telecom. Both companies have close links with the French government, France Telecom being 54% owned by the government which also holds a significant percentage (believed to be around 44%) of Renault. Renault Sport Elf is also linked to the government so a deal makes a lot of sense for France.

The investment necessary in a team is however going to be huge and there is an argument that Orange can get more guaranteed coverage if it buys trackside signage at races. The problem with this is that as rival Vodafone also wants trackside advertising to support its Ferrari sponsorship, Allsport Management (which does the signage deals) has decided to split the races between Orange races and Vodfone races to avoid a confusing message being sent out to the TV spectators around the world. Thus the opportunities are limited and although Orange might be able to buy a few title sponsorships of races the options are limited.

The final option is to withdraw from F1 and concentrate on other areas, such as art, cinema or popular music.

There are some worries at the moment that France Telecom has spent too much money on acquisitions and that it is having trouble keeping its $54bn debt under control. There is the added worry that its German partner Mobilcom may collapse and land the company with a further $5bn burden. According to the latest figures the company will not bee making enough money to even pay its interest charges until 2004 and the company is expected to talk to the French government about a deal to refinance the business. France Telecom boss Michel Bon is due to meet the new French Economy Minister for discussions this week.

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