Mobiles2day – Mobile Industry News

Deutsche Telecom is under pressure from shareholders to either sell it’s underperforming T-Mobile UK mobile telecommunication business or merge it with another mobile operator in UK. Merger with Hutchison’s 3UK is a possible move.

René Obermann, DT’s chief executive, said the UK business had to do better, and he is to appoint new management. “We feel the UK market is competitive, and consolidation would do good for that market,” he said.

Mr Obermann emphasised he was not commenting about possible deal-making, but his statement was seized upon by analysts as evidence DT might sell its UK business.

DT’s leading shareholders – the German government and Blackstone, the private equity group – are beginning to lose patience with the underperforming UK business. DT is expected to take a €1.8bn writedown on the UK asset next week.

The most logical buyer would be one of its British rivals, because consolidation ought to enhance the profitability of the remaining companies.

The UK is the only important European market to have five network operators – Telefónica’s O2, Vodafone, France Telecom’s Orange, T-Mobile and 3 – and they periodically engage in price wars.

Possible buyer for T-Mobile UK business could be France Telekom, which already owns Orange UK mobile operator. An Orange-T-Mobile tie-up would command a 40 per cent share of revenue paid by British mobile users. That figure includes Virgin Mobile’s customers, because the company uses T-Mobile UK’s network to offer phone services.