France Is Roi of 3G Markets
"We have taken into account population size and density, the number of licenses and their cost, and the regulation of the market," says Rebecca McKenzie, author of 'Western European Mobile Service Providers.' The U.K. and Spain are the next-best markets, according to benchmark-it, with Ireland finishing last on a list of 15 territories.
France has a well-regulated market that allows for the growth of alternative service providers, with Bouygues Telecom gaining market share against Orange SA and SFR. "Many European markets are poorly regulated. As a result, you have one or two players dominating those markets," says McKenzie. One example is Germany, where about 80 percent of the current mobile market is held by two dominant operators, namely T-Mobile and D2 Vodafone. Germany is ranked eighth by benchmark-it.
Joining Ireland near the bottom of the rankings are the Nordic countries, where markets are already dominated by a small number of players, such as Telia AB and Sonera, which have relied on regional operations for all-important economies of scale.
With the majority of markets favoring the current dominant players, McKenzie expects Western Europe (worth €93 billion in 2001, by benchmark-it estimates) to be dominated by five operators -- Vodafone Group PLC (NYSE: VOD), Orange, T-Mobile, Telefonica Moviles, and Telecom Italia Mobile (TIM) -- with fewer local competitors. She believes mmO2 will eventually become part of one of these pan-European players.
McKenzie also thinks consolidation is inevitable, as regulators, both national and central, have failed to address how many competitors each country can accommodate. "The risk is that we will see the same waste of resources as we have seen in the fixed market, where networks were built by businesses that have now collapsed, and whose assets can now be bought in a fire sale. The regulators should be looking at market efficiencies. There will be consolidation, but it won't tell us which of the operators have the most efficient businesses," McKenzie told Unstrung.
As a result, there will be companies welcoming takeover bids. "Not all acquisitions will be hostile. Some license holders will want to play themselves out of the market and will welcome bids."
Of the newcomers in Western Europe, McKenzie believes the Hutchison Whampoa Ltd.-owned players stand a good chance of competing with the incumbents. "In Britain, Hutchison 3G UK Ltd. has built an experienced team and has a very clear focus that will give it an edge. It also has financial stability and has struck some good content deals, such as the one for football information."
- Ray Le Maistre, European Editor, Unstrung