3 and T-Mobile in network share deal

3 and T-Mobile in network share deal

3 and T-Mobile are poised to enter a network share deal, which could save millions.

It is believed the two companies are in the early stages of discussions, having agreed preliminary terms.

Both networks have placed considerable importance on having HSDPA at the centre of their plans. Sharing the infrastructure costs would not only generate huge savings, but would also accelerate the rollout of the network to the target of 98% coverage.

The deal mirrors the arrangement between Orange and Vodafone announced in February this year with the two companies agreeing to share the burden of expanding their 3G networks.

3 and T-Mobile are already reckoned to lead the market with their 3G reach in the UK, with 90% and 85% population coverage respectively. Consolidation would push the companies way past Orange and Vodafone.

A deal between 3 and T-Mobile would leave O2 as the only network without a partner to share network costs.

Rene Obermann, CEO of Deutsch Telekom (T-Mobile's parent company), hinted at network consolidation last month, describing it as 'a perfectly logical and sensible move', in reference to one of T-Mobile's other European markets.

Both operators will have to convince Ofcom that they will remain competitive despite the potential deal.

Obermann said: 'regulators should accept there is a need to make more efficient use of capital-intense resources for both economic and ecological reasons.'

T-Mobile remains the most likely bidder for 3, which has been up for sale for some time. 3 is currently valued at around £4bn, with around four million customers (largely on contracts).

Parent company Hutchison Whampoa is pulling back from pumping money into 3, leaving it with fewer resources to compete against bigger players. An acquisition by T-Mobile would create a combined entity at the same level in terms of subscribers as Vodafone, Orange and O2, with many predicting a less-competitive market.

Some analysts see the network share deal as a stepping stone to an acquisition from the German-owned company.

Written by Mobile Today
Mobile Today

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