Vodafone Ponders Bid To Buy T-Mobile UK

Britain’s mobile phone market could lose a player, as Vodafone is reportedly considering a bid for T-Mobile UK. However, regulators would query the deal, as fewer operators might mean higher prices.

Vodafone is considering buying T-Mobile UK, worth around £3bn, according to the Financial Times. The FT calculates the deal would give Vodafone 40 percent of the UK’s mobile phone revenues, and Bloomberg says it would have 50 percent of the country’s subscribers.

Vodafone and T-Mobile have both declined to comment so far on the story, but insiders told the FT and Bloomberg that the world’s largest mobile operator is examining the possibility of swallowing T-Mobile, in a bid to increase share and consolidate, while the economy is in a recession. All mobile operators have found that usage is dropping as users cut back on calls and services.

The UK regulator, Ofcom, might not like the deal as the country currently has a very competitive mobile market, with no clear leader, though at five operators the country has more than any other major European country. Vodafone’s current 25 percent gives it the number two spot between O2’s 27 percent and Orange’s 22 percent. T-Mobile UK has around 15 percent and has been hit hard by the recession, and the other operator, 3, has only 8 percent.

Vodafone has already consolidated with Hutchison Whampoa in Australia, the FT points out, and the company has said in the past that it is willing to do more such deals. Regulators in France Spain and Italy have already allowed leading operators to get a 40 percent share.

Vodafone will this week begin to make indoor base stations called femtocells available for free to higher spending customers, using the technology to increase signal coverage indoors and persuade users not to switch to another service provder .

The company recently added a Google-branded HTC Android phone to its line-up in the UK to increase diversity and capitalise on interest in Google-based mobile phones.