Vodafone’s acquisition of T-mobile not the answer – Gartner

29 Jun 2009

The rumour mill is in overdrive over speculation that Vodafone may buy T-Mobile’s UK base. But a leading Gartner analyst suggests such an acquisition may give Vodafone more headaches than advantages.

Gartner analyst Charlotte Patrick spoke to siliconrepublic.com on behalf of Gartner Ireland and pointed out that a similar rumour was doing the rounds only weeks ago about Vodafone potentially buying Orange.

“It’s only a rumour, and the Orange rumour turned out to be false. My thoughts would be around why Vodafone would actually want to buy T-Mobile.

“My perception of Vodafone’s customer base is quite different to T-Mobile’s. Vodafone historically kept up its prices and has an enterprise feel to its brand. T-Mobile has created lots of mobile bundles to keep revenues up, despite low margins. They are a completely different fit.

“There would actually be more benefits in an Orange/T-Mobile merger.”

The UK mobile market is the one market in Europe that has five key operators. O2 has the highest market share of 27pc, followed by Vodafone with 25pc, Orange with 22pc, T-Mobile with 15pc and Hutchison-Whampoa’s 3 with 8pc.

Siliconrepublic.com put it to Patrick that with most European markets now saturated with typically 111pc mobile penetration, it is harder for smaller operators to eke out significant profit margin.

“Deutsche Telekom was having issues in several markets but has resolved these issues, except for the UK. My understanding is T-Mobile has less stores than its competitors, and because it has to put volumes through independent retailers, it is eroding profit margins. There is a spiral that happens if it doesn’t have its cost base under control. 3 UK is another example of an operator allegedly up for sale in the UK.

“If you look at the general performance of the main operators in the UK, O2 and Vodafone have grown their revenues, but Orange and T-Mobile have both declined.

“It’s indicative of too many players in a saturated market. It all depends on the market and the strategy of the operators. It seems to me that revenue declines are the biggest issue of the day for 2009,” Patrick told siliconrepublic.com.

By John Kennedy