Alex Kinch

The website of Alex Kinch, live from London

EXCLUSIVE: Skype, 3 and T-Mobile merger is in the pipeline

Posted by Alex on May 21, 2009 • (Comments)

Word on the grapevine is talks are in early stages to create a Skype-branded telco in the UK by combining the VoIP operator with the traditional mobile offerings of 3 and T-Mobile.

Speaking to a couple of reliable deep cover sources earlier tonight familiar with the deal, the story goes like this. A handful of major venture capital firms are working with Deutsche Bank to see if there could be a combined deal with to purchase Skype and a mobile carrier.

Firmly in the running are 3 and T-Mobile UK. Why these two? Quite a few reasons. Firstly, 3 UK is quite obviously in bed with Skype in a rather large way. They’ve been trumpeting their deals with Skype for quite a long time – especially with the latest ‘Skype SIM card’ offer -  and seem to be hell bent on getting rid of all their traditional voice traffic, in favour of shifting it to Skype. Because of this rather impressive marketing effort, 3UK has potentially the highest penetration of mobile Skype users compared to other operators. In addition, 3’s parent company Hutchison-Whampoa own INQ Mobile – who make the 3/Skype phone. Plus after today’s news about 3 teaming up with BT to launch the ‘Terminate The Rate’ campaign , it appears they are sticking in the knife in with other operators regarding one of the mobile operators traditional biggest sources of revenue.

Why T-Mobile UK? A merger between 3 and T-Mobile has recently been mooted, with Deutsche Telekom keen to get rid of their struggling UK division. Plus Deutsche Bank are owned partly by the German Government, who also just happen to be the largest shareholder of Deutsche Telekom.

The deal would fix a whole heap of problems in one go. It pleases eBay, as they get to offload Skype. Deutsche Telekom get to offload T-Mobile UK, which keeps their shareholders and the German government happy. And it certainly helps 3, as it not only gives them their long sought-after 2G ‘legacy’ customer base and network to up-sell onto a nice shiny Skype-enabled combined 3/T-Mobile 3G network, but also puts the combined operation in a class of it’s own.

More on this story as we get it..

Update: Thanks to Rebecca Fuller for the clarification email on the ownership of INQ

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Categorized as Mobile News
  • The regulators would never allow T-Mobile and 3 to merge even in a recession.
  • NTL and Telewest formed to create a near virtual UK cable network monopoly, and that was before a recession, so it's not impossible to push these things through. Besides if they did combine they wouldn't have more than 30% of the market - which I believe is one of the litmus tests of whether something is a potential monopoly.

    On a related note, I believe the Australian government are considering approving the merger of 3 and Vodafone in Australia - which only leaves two competitors (Optus and Telstra). These things aren't impossible..

    (edit: clarified the Australian government comment - apparently it's being investigated and *not* approved as yet)
  • Ahh I forgot about the 30% figure, I did remeber the compettion was rumoured to going to block a potential merge (can't remember the operators) here in the UK.
    These things may not be possible be would it be the best for the customer? I personally do not think it will.
  • Just to clarify, I'm not saying 30% is a precise figure for testing a potential market monopoly, but it is in my opinion low enough for a combined operator not to be of concern in that respect.

    I don't think the government (whichever party or form it may evolve into in the coming months) is in any particular strong position to deny such a merger - after all the combination of T-Mobile and 3 did agree to hand over 8.3877 *billion* pounds to the government for their 3G licences back in April 2000 - which incidently 50% was upfront and the rest over 20 years. It's these ongoing payments which are crippling the operators now.
  • james murphy
    actually 3 uk paid 100% of the licence fee in cash and then received approx 50% of the total cost by selling 30% of the company to NTT DoCoMo and KPN
  • My understanding was the deal with the government was 50% upfront and the remainder 50% over 20 years - although I (and the BBC article I found referencing the original sale) may be wrong..
  • Veronese1515
    Is this the first competition to Google's purchase of GrandCentral - the one number for all networks, for life concept aka Google Voice
  • james murphy
    Actuallt INQ do not make the skype/3 phone. The designed the phone but it is actually manufactured by Amoi. INQ is not a handset manufacturer. Given that 3 has sold a little more than 100,000 skypephones out of a total of 5.5million customers, i am not sure how you can say that 3 is trying to get rid of their traditional voice traffic.

    and how would you value 3 uk's 5.5million customers vs the 12m of t-mobile?
  • Thanks for the INQ clarification James, I'll update the article in a second.

    Are you in the UK? If you are, and you've been anywhere near a High Street recently with a 3 Store, read the national press or talked to anyone with a 3 handset, you'll have heard of the massive marketing blitz 3 are doing for Skype - which incidently has been funded by Skype. Whilst the 100,000 skypephone users out of 5.5 million customers isn't a great chunk of their subscriber base, what's more interesting is that they're trying to persuade their customers to use Skype for *all* their voice calling requirements.
  • Here's a quote for you:

    "Communication through the internet is exploding. Internet calling or VoIP, social networking, instant messaging and email are used by millions in the UK every single day. They are open to all on their PCs and laptops. We want people to be free to communicate from their mobiles in the same way as they do from their PCs.

    "In future you will be able to buy a 3 SIM for unlimited Skype-to-Skype calls for less than the price of a cup of coffee and talk for as much as you want without ever paying us another penny. We won’t ask you for a top-up or a monthly commitment. If you want to talk on a mobile for free, just join us and give it a go. This is for everyone."

    Who said that? Kevin Russell, Chief Executive Officer of 3 UK - only last month. Also from the same press release, 3 currently carry 1.5m minutes a day of Skype to Skype traffic - and have been branding themselves as the 'UK’s biggest mobile broadband network.'
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