Jeff Orr on Mobile Broadband Technologies

Network Operator Consolidation - The Race is On!

Third generation (3G) mobile technologies are finally coming of age. Lead equipment vendors for both network infrastructure and 3G mobile devices are in place. The larger national and international carriers are circling regional 3G operators like hawks, assessing the field and identifying potential acquisition targets. New market entrants for the mobile broadband and fourth-generation (4G) services are establishing alliances to compete financially with veteran operators. A reduction in the total number of global network operators is underway. Does this optimization signal a general weakness in the service industry or a reflection of crossing into the next phase for mobile communications?

Aggregation is one method being used to thwart competitive pressures from regional operators infiltrating a local market or removing the possibility of takeover. Until recently, Brazil’s mobile operators have been dominated by regional leaders from Portugal and Spain (Telefonica’s Vivo), Italy (Telecom Italia’s TIM) and Mexico (America Movil’s Claro). Brazil’s largest phone operator Tele Norte Leste Participacoes (“Oi”) announced a late April deal to buy control of smaller local rival Brasil Telecom Participacoes. The move is intended to keep mobile revenues inside Brazil by establishing a major local player. In another late April move, Freenet of Germany agreed to buy rival Debitel for EUR1.63 billion, forming the country’s third-largest mobile-phone company and fending off a takeover from United Internet AG. The formation of a larger carrier entity limits the likelihood that a takeover will occur and keeps mobile service revenues in the local market.

Read more about wireless network operation consolidation at Maravedis.