by Martin Veitch

Bigger, broader deals likely to follow Orange and T-Mobile

Sep 07, 2009
IT Strategy

Big as it is, the news that Orange and T-Mobile plan to merge UK operations is likely to be looked back on as merely a catalyst for much more significant combinations in the mobile telco space. The companies — and respective parents France Telecom and Deutsche Telekom — are big enough you might think, but with traditional revenue streams declining in value, there is a strong possibility that bigger, or at least better known, companies from the media, content and entertainment businesses will come in to the market and lead to another set of brands duking it out for our attention.

Already, mobile telcos have very obviously been looking at horizons far beyond data and voice. Look for the omens at O2’s sponsorship of the Dome in Greenwich, Orange’s prizes for fiction writers, T-Mobile’s football and cycling shirt logos or Virgin’s V Festival of music. These are companies spending vast sums on promoting their brands to the front and centre of human consciousness and taking tentative steps towards events, ticketing and broadcast.

By combining with each other they can gain economies of scale in marketing, infrastructure and the back-office. However, to get access to big subscription drivers, they might need better access to owners of the hottest properties in music, retailing, banking, travel, sport or business services and also benefit from the network effect of having brand recognition in other spheres.

As so often before, Virgin and Tesco are pointing to the future here. How long before the new carriers, or at least the new brands, are portal owners like Google, TV programming firms like BSkyB and music giants like Sony? Or in business, an airline, bank or utility? With one domino falling, we’ll find out very soon.