Thanks to a recent “profit warning” from T-Mobile UK, parent company Deutsche Telekom is being pressured to decide whether or not to sell the underperforming unit. The pressure is coming from Deutsche Telekom’s two main shareholders – one of which is the German government, the other a private quity group called Blackstone.
The idea of selling T-Mobile UK first arose 6 months ago. Since T-Mobile is in fourth place in UK operators, the investors are worried about it’s ability to succeed. Describing the UK market as “viciously competitive”, they are considering a sale, merger or acquisition deal with other UK operators. The most likely candidate seems the be the 5th largest market player, 3 – other options are Vodafone, O2 and Orange.
What we think?
Things really are tough all over. This makes me think of SK Telecoms recent announcement about trying to break out of the saturated Korean market. Combine that with the sheer quantity of stories recently about massive network investments in emerging markets, and a picture begins to emerge. There just isn’t any real profit opportunities for big operators in developed, competitive markets like the UK. It shouldn’t be surprising at all that some of the big boys are cutting their losses while they can and aiming for markets with more potential.
There’s also some Android issues to consider. It might sound a bit heartless, but all the recent buzz about Android devices from different sources couldn’t have come at a better time for Google!
