IPhone No Magic Bullet For T-Mobile U.K. – US-FOREX.US
Just how badly do network operators need the Apple iPhone to grow in Britain? O2 is the only operator to offer the in-demand handset, and its second-quarter customer additions were strong – 252,268 – at a time when rivals T-Mobile and Vodafone are actually losing customers. T-Mobile especially is feeling the pressure after parent company Deutsche Telekom sent in new management in June to shake up the unit. But even if O2′s exclusivity runs out, don’t expect T-Mobile to suddenly reap the benefit.The problem is that getting hold of the iPhone might not be quite as crucial for operators now as it was in 2007 or 2008, especially as competition in the touch-screen field has increased since then, while the state of the economy has markedly deteriorated. “The iconic status and must-have status of the iPhone is waning right now,” says Peter Boyland, an analyst with IHS Global Insight, adding that take-up of the latest 3G S model seems to have been “average.”So even though linking up with Apple
would certainly help T-Mobile add customers, while breaking O2′s hold on the product, it would not magically change its number four position in a market of five operators. The challenge lies more in the crowded nature of the British market, particularly at a time when consumers are keen to find the best deal possible. Undercutting is rife: France Telecom
subsidiary Orange on Thursday announced a mobile broadband contract for five pounds a month, the cheapest yet. And T-Mobile is also very exposed to the prepay market, which is more volatile than contract business: Boyland says 70% of the operator’s customers are on prepay, compared with just over 50% at Vodafone
and 60% at Orange.When asked if T-Mobile’s new chief, Richard Moat, would try to remedy this, the operator’s head of corporate affairs, Robin O’Kelly, told Forbes: “We are likely to proportionally grow contract more than prepay … They tend to bring higher average revenues per user.”Kelly would not comment directly on rumors that T-Mobile could end up selling out to a rival like Vodafone but said that Moat was focusing instead on bringing “organic growth.” He said that Moat would unveil his turnaround plan in mid-September, along with any financial targets.
So unless Moat can pull some special rabbits out of the company’s hat, it looks like the name of the game will be defensive cost-cutting and stabilization for the time being. Gaining the iPhone, if it comes about, will shake things up for the Deutsche Telekom
unit, but not dramatically.