Ovum: Still no evidence that international expansion makes sense

Julien Hewett at Ovum takes a look at Telefónica's bid for O2 and questions whether cross-borader integration can work. Hewett cites a number of examples where it doesn't stating, "More recently, it's been rather a struggle at TeliaSonera, while Vodafone/T-Mobile/Orange have yet to demonstrate any convincing benefits from their international footprints. For example, Orange UK is surely not doing better as part of France Telecom than it would if it were independent?"

Hewett believes inter-country consolidation makes more sense and points out, "That's why Deutsche Telekom will (again) be taking a hard look at the O2 numbers this week: merge T-Mobile UK with O2 UK (if the UK regulators allow), and sell O2 Germany to KPN so that it can be merged with KPN's E-Plus. In other words, a deal that would be about within-country consolidation, not international expansion."

Hewett also gives another reason why inter-country consolidation might be better in the long run: fixed-mobile convergence (FMC). He states:

in particular using the same core network and IMS platforms to link both fixed broadband and 3G access. For example, 18 months ago, I made a left-field prediction at a conference that eventually Vodafone might buy Cable & Wireless as a way of properly supporting enterprise customers. (In fact, Vodafone UK did an MVNO deal with BT a week later!) I think we will see some FMC deals like this in future - when we get beyond today's fashion for international expansion!