July 6, 2009
The past 12 months have seen T-Mobile’s performance in the UK market deteriorate, leading investors to increase pressure on managers to sell the UK business. T-Mobile’s subscriptions have slipped from a high of 17.3m in 2007 to 16.8m by the end of 2008, with further losses predicted through 2010. Meanwhile, operators such as Telefónica O2 and Three UK — the latter shares T-Mobile’s network — have consistently increased their market shares (see exhibit).
Considering that the UK is Europe’s most competitive mobile market, with five international powerhouses competing for subscribers, a market consolidation seems inevitable. Rumors of T-Mobile’s acquisition by Vodafone emerged last Monday, and the market has been awash with talk of bids for the struggling operator. Telefónica O2 has expressed interest in acquiring T-Mobile’s operations, while France Telecom is examining the feasibility of a joint venture with its Orange brand. Deutsche Telekom stated that it would prefer an asset swap for its UK business, hinting at the possibility of snapping up Vodafone’s ailing Turkish operations.
Subscription market shares of UK operators, 2005-2009
Source: Pyramid Research, Mobile Forecasts Q2 2009
The news comes at a critical time in the UK regulatory cycle, with Ofcom nearing its decision on how to refarm the available mobile spectrum. The possibility of a T-Mobile acquisition by either Vodafone or Telefónica O2 would likely derail the government’s latest plans for spectrum refarming (see our latest Insider, Spectrum Refarming for 3G). T-Mobile and Orange strongly advocate the breakup of Telefónica O2 and Vodafone’s exclusivity in the 900MHz spectrum. With T-Mobile at risk of falling into the hands of Vodafone, the future division of the 900MHz and 1800MHz bands now seems uncertain.
Talks of a sell-off have long plagued Deutsche Telekom’s UK operations, with the firm’s management staving off investors’ call for a sale as late as this past May. T-Mobile’s managers have urged its shareholders to adopt a long-term view of its operations in the UK. Given the economic climate and investor sentiment toward long-term performance, it comes as no surprise that the firm’s shareholders have renewed their calls for a divestment of the UK operations.
T-Mobile has stated that it expects a minimum of €3bn for its operations, however, a bidding war between Vodafone and Telefónica could push that figure even higher. The opportunity seems extremely tempting for Vodafone, which has seen its market share slip to second place behind Telefónica O2. A tie-up between T-Mobile UK and Vodafone, pending approval by national and European regulators, would see Vodafone pull ahead of Telefónica O2 with a market share of more than 45% in 2009.
Despite the onslaught of news surrounding the possibility of a sale, Deutsche Telekom has the benefit of time on its side. Although investors have voiced their disappointment with the firm’s UK operations, the firm still remains well-capitalized and financially stable. As such, both investors and managers are positioned to hold out for a more favorable offer.
— Andrei Tchadliev, Analyst, EMEA
Spectrum Refarming for 3G: A Low-Cost Boost for Mobile Broadband
Insider published July 2009
As existing mobile networks are stretched to their limits, spectrum refarming offers the most cost-efficient and practical method of meeting demand. Pyramid Research believes spectrum refarming, although controversial, will benefit operators in Europe by boosting network capacity economically while improving the availability and quality of existing services. This Insider analyzes the advantages of refarming 900MHz spectrum for UMTS, looking at data usage, mobile broadband computing, frequency characteristics, capex, 3G coverage and competition. It draws on the refarming experience in three key countries, Finland, Switzerland and the UK, to discuss different regulatory considerations and evaluate strategies.
Western Europe Mobile Operator KPI Forecasts
Forecasts published quarterly
Our Mobile Operator Key Performance Indicators Forecast products provide a complete picture of wireline voice and data communications in each of 16 Western European markets. The Excel output includes five years of historical data and five years of market projections for metrics such as subscription totals, market shares, net and gross additions, prepaid and postpaid subscriptions, business subscriptions, data ARPS, aggregate ARPS, prepaid and postpaid MOU, churn and total service revenue — all broken down for the mobile operators in the respective markets. We believe our Mobile Operator KPI Forecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets.
Europe to See Huge Growth in Mobile Broadband Services despite Recession
Telecom Insider published May 2009
More than 10.7m new mobile broadband connections were added in Europe in 2008, against 6.5m in 2007. Despite the economic slowdown, we believe mobile broadband adoption will continue to grow relentlessly across Europe. This report analyzes the growth potential of mobile broadband computing in Europe, focusing on the three main factors affecting adoption: Networks, user devices and pricing. It looks in detail at the four markets best representing Europe’s different regions: Poland, Russia, Spain and the UK.