France Telecom splits £500m pan-Euro role

Media Planning Group is bracing itself for a wave of redundancies following its loss of the £54 million Orange UK media account.

The numbers are unclear but Initiative Media, which won the UK Orange account as part of France Telecom's £500 million pan-European media review, is unlikely to hire the entire MPG team. However, it will be staffing up substantially.

France Telecom has decided to split the pan-European business between Media Planning Group and Initiative Media.

Initiative also picked up the £14 million buying account for Freeserve, part of France Telecom, from Walker Media.

Naked Communications has been handed the UK planning role on Orange and Freeserve.

The Havas-owned MPG did retain the account in France, Switzerland, Spain and Slovakia, however. It also added Romania to the list and will act in a co-ordinating role at group level. Initiative will work in the UK, Poland, Belgium, Denmark and The Netherlands.

The loss of the Orange account will result in MPG sliding down the top 20 media agency rankings. It was ranked 16th at the end of 2002 with billings of £118 million, according to Nielsen Media Research. Orange accounts for almost half of these billings.

MPG's UK office has retained a £21 million international planning and buying brief for France Telecom.

Marc Mendoza, MPG's UK chief executive, refused to comment on reports casting doubt on the agency's future. He said: "We're very proud of the work we've done for Orange since launch but understand that sometimes clients need a fresh perspective."

The appointment of MPG and Initiative follows a decision by France Telecom to consolidate its European media as part of its Total Operating Performance efficiency programme.

France Telecom called the review in April to reduce its roster of nine media agencies. MPG and Initiative pitched against OMD Europe, Mediaedge:cia, ZenithOptimedia, and Carat.