Summary
T-Mobile as a brand may not wish to exit the UK market altogether, however it does not have the marketing strategy and investment needed to maintain its brand strength and more importantly ARPU growth. A merger with 3 and/or Orange of their respective networks could free up valuable funds for market/sales investment. O2 (Telefonica) would only contemplate purchase if it meant over hauling Vodafone on its home territory.
Analysis
It would be a difficult decision for T-Mobile to leave the UK market entirely, but it does need to come up with an answer to the issues it faces, too many networks and insufficient strength in its brand.
In Q4 2008 the mobile market in the UK contracted 2%, partly through current recession and also because of market saturation.
To move forward needs,
a) a strategic market change in T-Mobiles offerings
b) a move of some of its investment from network to end user sales
c) some new ideas on how to use the excess capacity it has
Orange (France Telecom) does not need T-Mobile's excess capacity overnight, but it does need to reduce its network capex outlay and has made a move to do this through a network sharing arrangement with T-Mobile.
O2 has a strong brand, high ARPUs and surprisingly a very strong SMS traffic base. So why would it enter into an merger or take over of T-Mobile, only to thwart Vodafone. But that does bring a Competition Commission inquiry and possible need to divest itself of some thing.
So concluding, financially any or all of the above have good reason to merge with T-Mobile on a network basis. So could this happen and still allow T-Mobile to continue as a brand, that to me is not very likely.
