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Euro Carriers Throw Shapes

Light Reading
LR Mobile News Analysis
Light Reading
3/29/2004

European heavyweight carriers T-Mobile International AG, Telecom Italia Mobile SpA (Milan: TIM), Orange SA (London/Paris: OGE), and Telefònica Mòviles SA today launched their FreeMove alliance in an effort to boost revenues and battle [ed. note: or baffle?] the global market leader, Vodafone Group plc (NYSE: VOD).

The move comes almost a year after the four companies first announced plans intended to simplify roaming tariff schemes for customers and enable access to the same service on a global basis (see Mobile Trio Form Alliance and Orange to Gang Up on Vodafone).

Speaking at the London launch, Marco de Benedetti, CEO of TIM, claimed that the alliance will result in “10 percent annual growth per year in voice traffic... and a doubling of GPRS data traffic every year for the next three years." (See Alliance Launches FreeMove.)

The four carriers -- with a combined customer base of nearly 170 million users -- will focus on Europe’s €4 billion (US$4.9 billion) market “for multinational companies,” through a series of business roaming tariffs split into geographic zones. According to Rene Oberman, CEO of T-Mobile, specific prices will be confirmed “in the next six weeks.”

“It is a long-term objective and we are open to new members,” added de Benedetti. “The initial focus is on Europe, but progressively we will extend it to North and South America and the other markets where we are present.” T-Mobile’s Oberman confirmed that T-Mobile USA would be the next player to jump on board.

Such grand ambitions have been well received by analysts, following earlier concern that the alliance will have little impact on overall industry growth (see Euro Alliances Get a Grilling).

Previous high-profile alliance failures -- most notably BT Group plc's (NYSE: BTY; London: BTA) Concert venture with AT&T Corp. (NYSE: T), and the demise of KPNQwest -- certainly give skeptics added reason to be dubious about the deal (see AT&T and BT to Unwind JV and KPNQwest Goes Bankrupt).

“It is going to take time, but it is all about putting the building blocks in place so that everyone has a bigger slice of a bigger cake,” says IDC senior analyst Paolo Pescatore. “Reading between the lines, it is clearly an attempt to ensure Vodafone doesn’t run away with the market.”

Vodafone is the world's largest network, with a subscriber base of almost 90 million in Europe alone. The company has equity interests in 26 countries and partner networks in a further ten countries, and it boasts a majority share in 16 markets.

Last month a rival partnership consisting of nine smaller European carriers unveiled its Starmap mobile alliance brand, offering services such as picture messaging and flat-rate roaming tariffs (see Euro Operators Form Alliance and Alliance Unveils Starmap).

— Justin Springham, Senior Editor, Europe, Unstrung

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