BT's Mobile Ménage à Trois

British Telecommunications plc (BT) (NYSE: BTY; London: BTA) today confirmed its intention to return to the U.K. wireless market with a "family-targeted" product using leased network spectrum from T-Mobile (UK) rather than from ex-partner mmO2 plc (see BT Unveils Mobile Home Plan).

As revealed by Unstrung last week, the carrier has opted not to work with its former subsidiary for the converged fixed and mobile project (see BT Piggybacks T-Mobile).

However, just because it's now linked with BT doesn't mean that the service provider is above getting a li'l hot network action with its old flame now and then. BT Retail chief executive Pierre Danon says that the operator will continue to use mmO2’s network for its existing Mobile Sense service (see BT Offers Mobile Sense).

Ovum Ltd.’s chief analyst Julian Hewitt suggests that the decision to work with two wireless network partners puts BT firmly in the driver's seat. “Not owning a network gives them flexibility -- they can play off one network against the other. They probably want to be dealing with more than one operator so that they don’t get too cozy.”

BT's Danon says the carrier's new "virtual" network deal with T-Mobile also makes sound financial sense in a market where there is a lot of spare bandwidth available. “I can buy a lot of capacity on the market and I can get good prices,” Danon told reporters on a conference call.

However, Danon also stressed that the decision to use T-Mobile’s network was “not based purely on price,” before later revealing he had snatched “a very competitive deal.”

Analysts certainly believe financial incentives were the catalyst for today’s deal. “BT is trying to be very cost competitive in the consumer segment, and therefore it has to go with the best deal,” comments Michael Ransom, senior analyst at Current Analysis.

— Justin Springham, Senior Editor, Europe, Unstrung
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