U.K. Mobile Market: Four to Three at the Top
Four and three are the key numbers for contestants and regulators in many markets, but particularly in Europe, where the numbers describe the leading mobile service providers in a market.
In the highly-competitive U.K. mobile market, the key number will drop from four to three as a result of Telefónica’s sale of its U.K. mobile operation to Hutchison Whampoa, previously the smallest of the four leading service providers.
Not often does any single provider jump from last to first in market share, in any industry.
Hutchison’s acquisition of the Telefónica subsidiary O2 UK for £10.25 billion in cash will vault smallest mobile operator with 7.5 million customers to the largest with 31.5 million customers.
At the same time, the BT acquisition of EE will give Hutchison and BT market share of about 38 percent each.
Vodafone would drop to third place with 24 percent market share.
The conventional wisdom is that reduction of the number of leading providers from four to three would allow all the firms to firm up profit margins and reduce the amount of ruinous competition. That of course raises concerns about whether there will be enough competition to restrain predatory behavior.
Some would argue pressure from application providers is the new restraint. Google, for example, sees lower prices for Internet access, mobile services and devices as helpful inputs to its own business, and Google will not stop putting into place operations that help drive such cost reductions.
Google will emerge in precisely that role in the U.S. mobile market soon.