Why Vodafone Wants to Buy T-Mobile Now
July 15th, 2009Coalition found to be the best way to escape down slide
Coalition among UK network operators has been found to be very important over the last three years. And in the present week, for maintaining revenue, the UK operators were found with greater chances of buyouts. Most strong was the chances of Vodafone buying the T-Mobile’s UK business. This, if done, will be the first merger in the industry’s history.
With the falling profit margins, coalition has become the best path to be taken by operators to control the fall. Vodafone’s UK CEO, Guy Laurence, man about whom I had heard to have done surprising feats in the Dutch market, has been in his office for about six months. Guy had been intimated by many, specially by T-Mobile UK MD, Jim Hyde, about the challenges he would be facing in the UK.
I also got to know that after six months in the office, Laurence had to surrender to the high pressure for the Vodafone in the UK. Vodafone had £1.4bn revenue in the third quarter of 2007 and after that it failed to go above the £1.3bn until March this year.
Since Q3, 2007 profits have continuously been going down from £379m to £295m that was calculated for the final three months and the same was found out for the first quarter of this year. And its period since Q3 2007 has been much more miserable with the £1.14bn revenue in Q3 2007 nosediving straight to £760m for the first quarter this year.
With such downfall, all the operators have been cutting costs to improve profits but Vodafone has been looking forward towards a massive change in its UK market. I heard from some senior Vodafone officer that they changed all they could, and have still not achieved their goal so they would now be changing the playing field. And they found that the T-Mobile to be the most naked company with nobody to push cash into it.
Deutsche Telekom’s young CEO, Renee Obermann had brought in Richard Moat in order to improve business here but now wants to go with the consolidation. Vittorio Colao, the opposite number of Renee was found saying that consolidation made sense in some markets and he expected it to do so here also.
