Deutsche Telekom, France Telecom intensify their cooperation

Monday 14 November 2011 | 16:02 CET | Market Commentary

The paper suggests this may be a step towards independence for the joint venture. Research has shown that joint ventures rarely have a long life, especially when they are subject to 50-50 control. In this case, one could speculate about an independent future for Everything Everywhere, with a further separation from DT and FT. At an investors day in September 2010, the company emphasized the importance of wholesale services. However, it's likely that wholesale (that is, sales to parties other than DT and FT) will really only get off the ground once a complete structual separation is implemented - in other words, when the company is sold. A sale could take the form of gradually letting in third-party shareholders, a sale to private equity or an IPO. At the moment, wholesale to third parties is largely limited to one customer: Virgin Mobile. Tapping the competition for further network sharing is likely only going to occur when DT and FT exit. In the past, network cooperation in the UK has existed between Vodafone and Orange, between T-Mobile and 3 UK (Mobile Broadband Network Limited, MBNL) and between Vodafone and O2. MBNL is expected to become a joint venture between 3 UK on the one hand and Everything Everywhere on the other.

Everything Everywhere moving in this direction has importance at several levels:

  • For DT and FT. Setting aside the persistent rumours circulating for years of a possible merger, the two companies have been working closely together since February 2011. This includes among other things RAN sharing in the mobile market, M2M communications, product development and joint procurement (the recent BUYIN venture).
  • For mobile operators in general. Network sharing should be continued as much as possible, as it can lead to significant savings. This offers great advantages with the arrival of LTE and additional spectrum resources. 
  • Also for fixed operators. Structural separation could be fully implemented here and seen as a test bed for its application in the world of fixed networks.  This puts some distance between the capex-intensive networks and the opex-intensive services delivery. 

Conclusion: an interesting development. First for DT and FT, which are building their partnership not through a merger but through any number of other projects. In addition, the entire sector can profit from the experiences built up in the UK. 

Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

::: add a comment