Partner can come out ahead

Gad Perez

The Orange brand has in any case lost its value, so why pay NIS 15 million a year for it?

Until 4-5 years ago, the Orange brand was ranked highly in the "Globes" Israeli brands index. For many years, it was second only to Coca Cola. Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) CEOs in the past would leverage the brand, and invested tens of millions of shekels a year in it.

In recent years, this has ceased to be the case. The Orange brand lost its shine some time ago. It happened because of the opening up of the mobile telephony market to competition, completely eroding the value of the brand, and making the Israeli consumer look for a fair price instead of preferring the international aura that cost him or her so much.

How many subscribers do you know today who really go to Partner because of the Orange brand? The churn figures show that, despite the brand, Partner has lost more subscribers than its competitors in recent months. That says it all. Partner has other values that are much more real, such as better service, but customers are not prepared to pay more even for this, making the Israeli mobile market one of price only, and brands hardly have any value any more. Paying Orange NIS 15 million a year therefore makes no sense whatsoever for Partner.

Partner would do well to take advantage of the opening to squeeze some juice out of this orange. NIS 15 million is a lot of money for a company likely to make a loss this year, so what's the point of continuing to pay it when it's clear that in any case the brand has become a liability rather than an asset? It would be sensible for Partner to find a way of adopting new values in the wake of the incident with Orange, to demonstrate that it is a proud Israeli company that will not be broken by boycott threats, and to tell Orange's anti-Israel CEO that it will meet him in court. Today's pictures of Partner workers with Israeli flags, demonstrating and singing, did the company a huge service, on the lines of "the more they afflicted them, the more they multiplied and grew". That has to be Partner's line. In the end, if it manages the incident wisely, it can only benefit from it.

Published by Globes [online], Israel business news - - on June 4, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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