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The spectre of one UK mobile network buying or merging with another for the first time in the industry’s history drew closer this week.

Strong indications emerged that Vodafone was lining up a deal to buy T-Mobile’s UK business.

There are three routes Vodafone could take for a deal with T-Mobile:

• Buyout Deutsche Telekom is interested in trying to resuscitate another of its ailing divisions: T-Mobile USA.  A sale would give it the firepower and focus to make a concerted bid to take on Verizon and AT&T in America.  For Vodafone, it has a cleaner option to start integrating T-Mobile’s operations, cutting out its head office, remaining customer service units, systems and processes and even stores.  It also brings Vodafone more customers who are making ‘on-net’ calls, so not incurring termination fees.

• Asset swap Among Vodafone’s other divisions of concern is Turkey.  The Turkish unit has a similar value of T-Mobile UK: £3bn/£4bn.  City sources claim Vodafone is keen to offload its Turkish business after a series of problems, while T-Mobile has considerable interests in Eastern Europe and is looking at the region as a whole for growth.  Turkey could be a natural fit, and offer an option where Vodafone doesn’t need to generate the cash.  The question here is why Deutsche Telekom stands a better chance of challenging the Turkish incumbents than Vodafone.

The deal faces obstacles in the form of Ofcom as well as both UK and European competition and regulatory authorities.  Given that many European markets have an incumbent with over a 40% share (the level a combined Vodafone-T-Mobile unit would represent), it is unlikely it would present significant hurdles.

Any deal would immediately be a matter for the Office of Fair Trading (OFT) in the UK, who would seek advice from Ofcom.  Ofcom will be guided by whether they feel a deal would undermine competition in the
mobile market.

Critics will argue that a Vodafone-T-Mobile merger or acquisition will remove choice for consumers, especially if there is further consolidation.

Operators have responded with the threat that they will find it harder to justify investing in the UK for things like 4G technology if prices continue to fall.

Another factor is network share.  Vodafone is already involved in an agreement with O2 to share sites, while T-Mobile is further along with a deeper infrastructure sharing project with 3.  Experts say unravelling these operations or finding an even more efficient solution is not insurmountable.

Questions also remain on the repercussions of the deal for Vodafone.  There is a danger that T-Mobile will continue to shed customers, even after an acquisition, and possibly at a faster rate, eroding the value of the T-Mobile base that Vodafone would have acquired.

Finally, there is the matter of Vodafone’s rivals.  There is considerable speculation inside the mobile industry and the City that this week’s speculation is just the start.  O2’s parent company Telefónica could make a rival bid to extend O2’s lead in the UK.

There is also a belief that O2 could bid for 3, or 3 and T-Mobile could pursue a joint venture of their own. There is further speculation that Orange could buy Virgin Media, taking the cable broadband infrastructure to make some serious clout as a complete communications player.

One thing is for certain, the plotting and speculation has only just started.

Source:-   MobileToday (http://www.mobiletoday.co.uk/Vodafones_options_for_T_Mobile_deal.html).

Hi Mobaholic,

Shall we assume all these mergers and buying plans as a symptom of the economy bouncing back....?

I rather think that the reverse is the case.        :'(

It is the current harsh economic conditions that made T-Mobile write down its assets considerably ... which caused the parent company Deutsche Telekom to suffer a loss ... and to decide to try to cut it's losses in this country by putting T-Mobile up for sale.
The reputed price of the sale is some £3 billion, which is a quarter less than the company paid for it's 3G license I believe !        :o

This strikes me as a classic 'distressed sale': not a sign of improving times.        ;)

I think this is the same, even I thought.
But there is a slight difference,
That, the prices are all came down to what they actually worth, rather than the manipulated one's without any core.......
And now it's the Buyer's market......

Anyway, there were no mergers or takeovers for quiet a long time in the UK Economy.....

So let this make a momentum in the Economy, let's hope for the best......... :)