France Telecom in £200m winner-takes-all media pitch

LONDON - France Telecom has kicked off a winner-takes-all media review across its entire business portfolio, which includes the £50m UK Orange media account and the £14m Freeserve account.

The review is part of a drive by France Telecom to cut costs and achieve greater efficiencies as it struggles with a £46bn debt.

The French giant splits its business into four main divisions: Orange, the ISP Wanadoo (or Freeserve in the UK), fixed-line voice and data services in France and fixed-line voice and data services outside France. It uses about ten media agencies in 16 different markets.

The mammoth review is understood to be taking place market by market, with pitches scheduled to begin this spring. Sources suggest it is very much a purchasing-led decision to begin with, although strategy is likely to become part of the review at a later stage.

In the UK, Orange is the biggest France Telecom brand. The main incumbent on the media account, Media Planning Group, will be included in the final pitchlist.

Other media agencies that are likely to contest the business include Initiative Media, Mediaedge:cia and ZenithOptimedia, none of whom has a telecoms client. However, sources suggest other networks will be tempted to contest the £200m account.

The review covers Orange's entire footprint which is concentrated in Europe, the Middle East and Africa. Its main markets are the UK and France, but it also has a presence in Switzerland, Romania, Denmark, Egypt, Thailand and the Ivory Coast, with minority interests in Italy, Portugal and Austria. MPG handles the business in the majority of these markets.

Commenting on the group-wide review, an Orange spokesman said: "In order to buy media more efficiently and benefit from a cumulative buying power, the France Telecom group has decided to launch a full-scale review."

Marc Mendoza, the chief executive of MPG in the UK, said: "We're confident we've done a good job with Orange in the UK and France Telecom in France for the past nine years. After all that time, it is entitled to have a review and we are looking forward to taking part." In the UK, Freeserve is handled by Walker Media.

France Telecom is known to have been looking at ways to cut costs for some time. Last month, it posted a net loss of €20.7bn, the second-biggest loss in French corporate history.

The Orange media rethink follows a major creative review. Last September, Lowe London was forced to resign the account and in October, Mother scooped the business.

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