This will drive costs down thanks to the savings on sites and a single network infrastructure.
The move is strategic.
It piles pressure on other operators who will have to respond and make similar cost savings to remain competitive.
Vodafone and France Telecom have created an alliance that will speed up consolodation.
I am convinced that the UK will have 5 networks but only 4 operators shortly.
02 and T-Mobile could do a similar deal of course but neither would benefit from increased coverage. They would make savings though and costs could mirror those of Voda/Orange allowing them to reamin competitive. Or either could buy 3 and make similar savings.
The one thing that is clear is that the cost of operation per customer has to be reduced if the Voda/Orange deal is approved. T-Mobile and 02 will have to make a move and the notion that H3G UK can compete as an independent in the longer term is now more unlikely than ever.
Voda/Orange 32 Million
T-Mobile/Virgin 16 Million
02/MVNO's 17 Million
3UK 3.5 Million
The simple aritmetic re cost per customer to provide the service suggests that the screws are now being turned and the fallout if the deal is approved will be significant especially with 3G terminination charges set to be regulated and reduced.
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