Rumour Mill : BT Forming Strategic Venture With T-Mobile, 3?

BT is considering plans to form a joint venture with T-Mobile and 3, two of the smaller mobile phone networks in the UK, in a bid to crack the quasi-oligopoly formed by O2, Vodafone and Orange.

Eight years ago, BT spun off its mobile arm, Cellnet, in a bid to raise capital to cut its debt. Cellnet went on to become O2 and was acquired in 2007 by Spannish telecommunications Giant Telefonica for the princely sum of £18 billion.

T-Mobile and 3 already share their radio networks and have signed a number of agreements; the most significant of which was a new company they both created in December 2007 called Mobile Broadband Network limited.

The trio have already worked together with T-mobile and 3 agreeing with BT to use their 21CN solution. BT tried to launch a mobile network a few years ago, called Fusion as it partnered with Vodafone to become an MVNO.

It proved to be a costly mistake with less than 50,000 customers signing over two years.

BT doesn't have much of a choice. It is possibly the only big telecommunications company in the world that doesn't have a powerful mobile arm and this is leaving it vulnerable against competitors that are offering products and services that essentially bypass BT's backbone.

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Our Comments

Could BT buy 3? Maybe. Their debt has increased tremendously over the past year, reaching nearly £24 billion while their share price has slumped by more than 70 percent over the last year alone. 3 is owned by Hutchinson Whampoa and its Chairman, Li Ka-Shing, is Asia's wealthiest man. The wise businessman could look for an all stock swap to sell the UK arm of 3 as he did in India.

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