Suitors for T-Mobile: What could the consequences be?
Shareholders are now pressuring the management of Germany's biggest telecommunications company Deutsch[e] Telekom to slap some lipstick on its UK mobile business, T-Mobile, in view of disappointing market results. Marketingweek (and City AM) both reported that the “The British market is highly competitive and has comparably low margins". The company is set to announce a massive write down of around £1.6 billion for its mobile operations in the UK next week, angering the German government and US private equity group, Blackstone, which will apparently push forward for T-Mobile to get rid of its UK arm.
So far, Deutsch has found two possible partners.
1. France Telecom's Orange: This would merge the fourth largest mobile carrier, T-Mobile, with the third largest, Orange . With T-Mobile's valuation in the region of £3.2bn (€3.6bn), such a merger would give the conglomerate 40% of all the UK's mobile phone revenues. That's a pretty big slice, so would the UK competition authorities allow it?
2. 3: That's not a typo, but "3" as in the UK mobile provider that is part of Hutchison Whampoa's Hong Kong based conglomerate. 3 is the UK's smallest mobile network, but Hutchison Whampoa is involved in ports services, hotels, retail, energy, infrastructure, telecommuications, and hula hoops. Under the management of Asia's most powerful man, could this mean fierce competition for the big boys?
According to industry experts, mobile phone service providers in the UK would most likely favour a merger, even if it meant a giant hybrid T-Mobile/Orange behemoth. With five mobile phone carriers and a population of 60 million, industry pundits say that the effect would cut down on the intermittent price wars that break out among them. But would customers, supposedly the beneficiaries of these price wars, be equally enthusiastic?