T-Mobile UK To Merge?

Reports surfaced in the Financial Times over the weekend that Deutsche Telekom is to sell its T-Mobile network in the UK. That would still leave us with a very competitive mobile market, giving users a good deal – but which other network would pick up T-Mobile?

The T-Mobile network has had a big dip in revenue, having lost three percent of its user base according to reports. Deutsche Telekom as a whole has had a bad year. Last month its German network failed for three hours, leaving millions of users without wireless services, on the very day the company was forced to slash its earnings forecasts.

If the company decides to cut its losses, the UK might make sense. It’s in fourth place in a competitive market, and it would be freer to press hard in the US market where it may be catching up with Verizon and AT&T.

But who would buy it? We can say for certain that BT would love to. The company has been hoping to get back into the mobile space since it was forced to sell its network to O2 (now part of Telefonica) and has come up with various schemes involving Wi-Fi and (just possibly) WiMax to meet the ambition. Far simpler to buy a phone network… if it could afford it. Not many seem to think it could.

Orange is another possibility, backed by its owner France Telecom, which would like to get more share in the UK.

Several people are backing 3. It’s had a network sharing deal with T-Mobile for some time, and a merger between the two would create a stronger entity.

And then there might be others from abroad, say perhaps China Mobile.

We’d have to say that merger is most likely. It’s very unusual for a country, especially one of only moderate size, to have five separate mobile networks. If revenues fall in the recession, that situation may become untenable.