Ericsson, the world’s leading supplier of telecommunications network equipment, said yesterday the 3G market was overcrowded, and that even the largest markets could not support more than four license holders. But Torbjorn Nilsson, head of marketing and strategy at the Swedish group, also said that the expected shakeout was not a sign of 3G’s failure – it was more a pre-condition for its eventual success. Debts, losses and the need for economies of scale would all drive consolidation, he added.Written by The Financial Times for PMN Mobile Industry Intelligence.
PMN’s 06/09/2002 comments on the BWCS article ‘T-Mobile nears agreement on US merger‘ alluded to the case for network sharing and industry consolidation. Now Ericsson is adding its voice to the clamouring calls for mergers and partnerships. Its motives are simple – four strong players in a market are likely to increase their infrastructure spending sooner than six weak ones.
The markets causing primary concern are the UK and Germany, where five and six licenses respectively were sold. There has been talk, dismissed by both parties, of a merger between mmO2 and Hutchison in the UK. They already have an agreement enabling Hutchison’s 3G customers to use mmO2’s GSM network. If there is any truth in the rumour, it would be unlikely to happen before H2 2003, simply because Hutchison will be pre-occupied with its own 3G rollout. There will also be regulatory hurdles at a national and EU level to overcome.
Telefonica and Sonera have mothballed plans for their joint German 3G venture, bringing the number of immediate competitors down to five. Factor in the network sharing agreements between the smaller operators and the picture starts to look more reasonable.
Originally published by PMN Mobile Industry Intelligence, the subscription-based analysis and insight platform founded by Marek Pawlowski.