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April 11, 2006 7:00 pm

Orange Polish brand switch investigated

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Polish prosecutors are investigating whether PTK Centertel, the Polish mobile phone operator controlled by France Telecom, harmed the company by agreeing last year to adopt the Orange brand.

The investigation was requested by a senior member of the ruling Law and Justice party, citing a think-tank report last year that warned about the cost of switching to the pan-European brand.

Centertel, which belongs to TPSA, the leading landline operator, which in turn is part of the France Telecom group, insisted it had done nothing wrong.

“The management of PTK Centertel is fully confident of the correctness of the decision to introduce the Orange brand to Poland,” said a statement released by the company on Tuesday.

Until last year Centertel’s operated under the Idea brand and had about 80 per cent market recognition. But the company changed names in August, bringing its mobile service into line with France Telecom’s global Orange brand.

After a pervasive advertising campaign about half of Poles recognise the Orange brand.

The 10-year agreement with Orange Brand Services costs 1.6 per cent of Centertel’s annual revenues, which last year came to 6.4bn zlotys ($2bn).

In his report last year, Andrzej Piotrowski of the Adam Smith Centre concluded that the costs of the rebranding were too high, and that the operation could end up costing the state 171m zlotys in lost income taxes.

Centertel rejects the accusations and has sued both Mr Piotrowski and the Adam Smith Centre.

Centertel credits the new brand with its 14 per cent revenue growth and attracting 800,000 new customers, giving it 34 per cent of the market, which is controlled by three companies.

The accusations come at a sensitive time, following the government conflict with Italy’s UniCredit over merging two local banks and the long-running dispute between Polish governments and Eureko, the Dutch insurance group, over the failure to implement a privatisation agreement thatwould give Eureko control of Poland’s largest government-owned insurer.

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