UPDATE: It doesn’t seem that long ago that we lost the one2one brand in favour of T-Mobile – and it might be about to happen again if Deutsche Telekom’s shareholders get their way, and force an exit of the UK market.
According to a report in the FT, T-Mob’s parent company are under pressure from the German government and private equity group Blackstone – it’s two main shareholders – to do something about it’s under-performing UK mobile operation.
Sources close to the supervisory board say the controlling investors are worried about the performance of T-Mobile UK, which is only the fourth-largest player in the UK market – with only Hutchinson’s 3 service having less market share.
The sources quoted by the FT continue: “the issue of getting out of one of Telekom’s largest markets was first aired about six months ago, but falling asset valuations soon made Berlin and Blackstone more cautious about pursuing a sale option alone.
“An alternative to a sale could be a merger or acquisition deal with a UK rival to gain market share, but they want a decision yesterday. Berlin and Blackstone want a quick decision [from executives] about fixing the UK”.
Any proposed merger or sale would have to meet with the approval of the German government, which controls 32% of Deutsche Telekom, and Blackstone, who account for a 4.5% stake – and then overcome any regulatory hurdles. However, according to industry analysts quoted in a recent FT article regulators would be unlikely to veto such a move. One option muted is a merger with 3 – who have already signed a radio access network sharing agreement with T-Mobile. Then again, we’ve been here before back in 2007 – although last time analysts predicted T-Mobile would purchase 3.
The deal would be a good fit – 3 themselves don’t have a 2G network, and would save money by not having to pay Orange for roaming access. The combined group would account for up to 30% of the market – quite possibly ahead of the current leader O2, who had 28.3% of subscribers at the end of 2008.
Another possibility is a merger with France Telecom’s Orange subsidary – analysts from JP Morgan say this is a possibility – which would give the combined group over 40% of the UK mobile subscriber base.