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Orange to Top Spanish LTE Launch

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Orange, a subsidiary of France Telecom (FTE) plans to become the first commercial LTE (Long Term Evolution) service provider in Spain, outpacing smaller rival Yoigo in the process. Earlier Orange had announced that it would launch its LTE services in the third quarter of 2013.

The French Telecom giant plans to launch its 4G services in Spain on Jul 8, 2013, 10 days before rival Yoigo’s planned LTE launch. Orange, ranked Spain’s third biggest telecom operator will launch its 4G service in six of the country’s largest cities, which will put it in an advantageous position as opposed to Yoigo, who initially plans to launch only in Madrid.

The company plans to add another nine cities by the end of 2013, before extending its reach to all provincial capitals of the country by 2015. 

Nevertheless, Orange has not yet announced the pricing of its 4G services whereas Yoigo has declared that it will upgrade its 3G customers to 4G free of cost. The French carrier has specified that it will invest around $500 million to modernise the transmission network and another $900 million to acquire spectrum to deploy LTE services.

Orange Spain will initially use the 1800 MHz and 2.6 GHz frequency bands to roll out the LTE services and at a later point will use the 800 MHz frequency to provide 4G services. Additionally, the company will use its current 15,000 base stations for the commercial deployment of the superfast technology and will add a new LTE enabled device to support the service.

Recently, France Telecom declared weak financial results for the first quarter of 2013, where the company reported a 4.1% decline in its top line. However, the company’s Spanish unit reported a marginal growth in revenues driven by improvement in fixed broadband and mobile revenues.

4G technology usually allows 10 times faster downloads of games, HD movies and songs than current mobile technology and is already being launched in some European countries.  We believe launching LTE services will provide Orange a competitive edge over its bigger rival Vodafone Group Plc. (VOD) and Telefonica SA (TEF), who have yet to confirm their plans to launch 4G services in the Spanish market.

Currently FTE carries a Zacks Rank #4 (Sell). Among other companies in the same industry, Telefonica Brazil S.A. (VIV), with a Zacks Rank #2 (Buy), is a better option for investors.

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