Connected Research

Union policy research in the 21st century

Speculation over future of T-Mobile

with 2 comments

The Sunday papers have been speculating over the future of T-Mobile; this time, it is Orange that is suggested as having made a bid – rejected – for T-Mobile at some indeterminate point over the last few months. No attribution of sources was given to the speculation.

The speculation is given added weight – or perhaps it is the reason why it has appeared this weekend – since it coincides with the arrival at the company of Richard Moat, a new chief executive for T-Mobile. Moat is a former head of Orange in Romania and the City expects him to launch a re-structuring programme to restore the company’s fortunes. Private equity bidders also represent a spectre at the feast not least in the image of Blackstone Partners, which has a sizable stake in T-Mobile’s parent, Deutsche Telekom, which recently wrote the value of the UK business down to £3.3bn.

The Observer reports that Deutsche Telekom, which has previously sought to maintain a corporate line independent of the influence of Blackstone, is to give Moat a ‘medium-term’ opportunity to turn things around.

The position of T-Mobile (and Orange) employees in all this appears nowhere to be seen. Connect stands by its members in T-Mobile in refuting speculation about the future of their company which ignores their prospects and their contributions.

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Written by Calvin

01/06/2009 at 1:00 pm

2 Responses

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  1. When O2 was up for take over, the general concensus was that 5 operators is 1 too many for the UK.

    I guess this is still the opinion, so will we be seeing more articles like this in the future?

    3 cannot feel secure in its position so which operator will it be who is ultimately taken over?

    S.M.Carter

    02/06/2009 at 11:20 am

    • Yes indeed – more articles like this is the precise intention behind Connected Research. We won’t be joining the speculation, for the reasons set out in the original post, but we will be seeking to provide a forum for discussion over issues like these.

      The four mobile operators do now have different market shares, according to the most recent data published by Ofcom: in terms of the share of the 68.8m UK mobile subscribers that exist (excluding MVNOs), Vodafone takes 24.1%, O2 has 28.3%, T-Mobile has 24.4% and Orange has 23.2%. (Ofcom doesn’t yet publish information for 3 on the grounds that this is commercially sensitive data, although the parent company accounts declare a UK and Ireland total of 5.4m subscriptions.) So, O2 has a slight lead, but all the four main operators actually have a very even market share of around one-quarter each (revenues and share of call minutes show different pictures).

      When the market is this even, it’s very expensive for operators to take subscribers off each other, so there is an inbuilt bias towards growing inorganically – i.e. by merger. But, in these same circumstances, it’s very hard to see how a merger between any of them could be approved by Ofcom on competition grounds.

      And Three has a powerful parent with apparently very deep pockets although I guess any vulnerability here is based on these pockets turning out to be a little shorter than expected.

      Calvin

      02/06/2009 at 12:55 pm


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