T-Mobile sale poses problems

T-Mobile sale poses problems


It has been a torrid 12 months for T-Mobile, with revenue slipping 2% and worse numbers expected this week. René Obermann, CEO of Deutsche Telekom (DT), teased the market amid reports of shareholders pressing DT to sell off the UK division, but an imminent deal still appears unlikely.

Buying T-Mobile is messy for a rival mobile operator and difficult to justify, especially with revenues plateauing. The attraction of a deal is simply that it will take out a player in the market, which benefits the remaining operators as much as it helps the one stumping up the cash. BT is arguably a more logical fit, with the need for mobile assets ever increasing for the dominant UK fixed-line company.

Improving revenue market share is the top priority for T-Mobile UK, with Richard Moat, a prominent individual behind the launch of Orange in the 1990s, set to take charge. Obermann is understood to be reluctant to force through a sale before he has given Moat one last throw of the dice. Obermann wisely wants to sit it out, wait until the economy improves, and secure a better valuation for the UK business than he would today before hoisting the For Sale sign.

The hope will be that T-Mobile UK can also absorb the bumps over the coming months without too much deterioration to its value. Outgoing UK managing director Jim Hyde spoke of the challenge of fighting in what he described as ‘a market with the world’s biggest operators competing for share’.

Moat now needs to do something that has been woefully lacking at T-Mobile UK in recent years, and is now the root of its problems: create momentum with a degree of consistency and clear direction.

Written by Mobile Today
Mobile Today


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