Thursday, December 22, 2005

Ovum: Carphone Warehouse emerges as a leading consolidator

Mike Cansfield at Ovum writes about Carphone Warehouse, which recently announced " that it has completed its acquisition of the Swedish reseller Tele2 for £8.5 million" and "has reached an agreement with Centrica to buy OneTel for £132 million." Cansfield asks why is Carphone Warehouse "buying two businesses that operate in the declining voice market, when all the growth is elsewhere, i.e. in broadband."

Cansfield answers because "in telecoms size matters." He then goes on to analyze why it makes sense for Carphone Warehouse and the strategic reasons for these acquisitions for getting into broadband and taking on BT. While it may be dismissed as "mere bravado" Cansfield notes that:

this is not as outlandishly optimistic as it may seem. Carphone Warehouse is strong in the high street, where (as we know from consumer mobile) customers are prepared to buy telecoms services. In contrast, BT is weak in this area. If Carphone Warehouse can leverage this strength and play on BT's weakness, the idea is not as fanciful as it seems.