Thoughts on Consolidation in International Telecom Market

Everybody is speculating how TMobile UK might be paired with one of Vodafone (VOD), O2 or Orange to consolidate the market. One analyst speculated VOD might acquire T-Mobile UK and give Deutsche Telekom (DT) its underperforming Turkey biz (Telsim) + cash. DT has a stake in OTE, a Greek mobile provider. So this will give DT a way to expand its Balkan footprint.

There is another attractive combination for DT. That is with Telefonica (TEF). It can sell TMobile UK to Telefonica [O2], and acquire O2 Germany from Telefonica. O2 Germany is ranked fourth in Germany where EPlus is executing very well. Telefonica will be better off consolidating the UK mobile market, and DT will be better off consolidating the German market.

The synergies in such a transaction will be far higher than in any other combination, and for all the players, including the ones not participating in the deals. Vodafone will benefit because not one but two of its main European markets (UK and Germany) would get consolidated.

Disclosure: No positions

Comments

[Dodge:]

Ridiculous suggestion

Jul 08 04:58 AM