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Vodafone circles T-Mobile

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“What’s interesting is what this says about Vodafone’s ambitions to be a global player,” comments Neil Thompson, chief executive of Responsinet, an internet usage monitoring service. “This move signals that those ambitions are over and the company is looking for growth closer to home. This is a great shame. Vodafone was one company that the UK could hold up as a true player and leader in global business.”

“If completed, the acquisition will create Britain’s largest mobile phone operator with some 40 per cent of market share. Understandably, regulators will be watching developments very closely,” says Mark Hodac, partner at technology and corporate law firm White & Black Legal. "Britain’s mobile phone market is unique in comparison to other significant European markets. With five major companies (Vodafone, Orange, O2, T-Mobile and 3) fighting for a slice of the pie, the domestic market is significantly more crowded than markets across much of Europe. Consequently, mobile phone companies are exposed to fierce competition domestically and are forced to operate at tight profit margins."

The mobile phone industry has not been immune to the economic downturn and Hodac reckons many will welcome today’s news on the basis that a reduction in the number of players in the market could allow the remaining operators to achieve healthier margins. 

“It’s virtually impossible nowadays for a new player to come in to the mobile market due to the huge investment in infrastructure required,” says Kevin Fortune, managing director of IT and technical support and services company Tech Concierge. “In concept, Vodafone buying T-Mobile is a bad thing – it is clearly anti-competitive. In reality, business will always be about survival of the fittest."

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