Deutsche Telekom is set to exit the UK market if rumours are to be believed and this could mean that its T-Mobile network could be sold or merged with another mobile phone network with 3 being the most likely.
3 merging with T-Mobile makes sense whatever way you look at the proposal and here are five reasons why we think it should go ahead.
(1) Size Matters
3 would desperately be interested in acquiring T-Mobile UK since it would give it the capability (and the clout) to take on the big three mobile phone networks in the UK (O2, Vodafone and Orange). If it fails to do so, it will be too small to compete against them and could die out quickly as the "triopoly" corner the UK mobile phone market. 3 has only 4.4 million active customers in the UK while T-Mobile has a whopping 16.8 million customers (if you include Virgin Mobile). A potential 3 + T-Mobile would bring together more 21 million users together, which is marginally more than O2.
3 and T-Mobile are probably 2 of the more progressive mobile phone networks on the market. T-Mobile introduced Web'n'Walk, its "unlimited" monthly internet plan for £5 at a time when others were charging for each megabyte downloaded, and was the first one to partner with Google back in 2005, way before Android was launched. 3 introduced Skype on mobile, something that has yet to be emulated by any other network. They are also the only network that openly allows its users to use their phones as a stand alone modem.
(3) Already working together
Both companies are already working together, having created the Mobile Broadband Network Ltd back in December 2007, a network collaboration joint-venture between the two that aims to create Europe’s largest HSDPA network. Both companies were looking at the time to combine their 3G base stations to save up to £2 billion by 2017. The fact that 3 has apparently ditched both Orange and O2 as its backup networks could be the clearest sign that something is about to happen.
(4) 3 has the money
3 is the mobile arm of Hutchison Whampoa which has a turnover of $45 billion. While an outright buyout would be too big, even for a company the size of Hutchison Whampoa Limited (HWL), a merger is possible. In the past, Hutchinson Whampoa chose to go down the route of simple majority rather than a more expensive buyout. Hutchison Whampoa for example owns 50.003% of HTIL (Hutchison Telecommunications International Limited), which gives it the majority, without the outlay.
(5) It is good for the rest of us
A world without T-Mobile and shortly after without 3 would almost certainly mean higher prices for the rest of us as the remaining three mobile networks will enjoy a virtual monopoly by making the cost of entry too high for any other player. At least 2 other players, Virgin Mobile (which incidentally has more customers than 3) and Ikea would be affected by any acquisition plans.