1/15/2009 3:07:00 PM
Blog: T-Mobile’s stop-start approach
Jim Hyde’s departure resurfaces all those concerns that people close to T-Mobile UK continue to have for the business, principally: will it be left adrift of its rivals?
We’ve got an opinion article in this week’s magazine (16 January) about Virgin, asking what the objectives are for the Virgin Media group. You could ask exactly the same question for T-Mobile.
The hand of Deutsche Telekom has always been apparent in T-Mobile’s UK activity. ‘Germany’ is routinely blamed for T-Mobile UK’s failure to pick up any momentum as it stops and starts, frustrating its manufacturers, channel partners and many of its own employees.
The reality is that the German company is still in debt and continue to require cash, and the UK business’s main purpose has been to keep feeding the parent company with funds.
The head office in Bonn is portrayed by some as the Germans wreaking havoc on the UK business. The reality is that it is entirely appropriate for a central office to expect a regional office to deliver cash.
Where the problem lies is maintaining any kind of momentum for the UK when it behaves so inconsistently.
The current market leader, O2, is in danger of leaving some clear daylight between it and its rivals. O2’s success has been placed squarely on momentum; building on the business, from quarter to quarter with solid and stable growth. It has given its propositions and marketing a sufficiently long period to evolve and has long term strategies instead of piling on connections in one financial quarter, and then letting it fall away.
Demands to generate cash centrally are clearly evident, but Deutsche Telekom must acknowledge that the current strategy of a burst growth in the UK, and then pulling back and watching the revenue come in will leave T-Mobile falling behind in a fiercely competitive market.
Jim Hyde’s replacement will have the political challenge of trying to align the group’s priorities with the realities of the UK market.