Dealers on Orange/T-Mobile JV

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Clive Bayley, managing director of T-Mobile and Vodafone dealership Fonehouse

“It will be interesting to see what is done with the retail estate. It’s very hard to get rid of retail shops – closing a whole host of them would
result in huge loses”

It’s an interesting move. Bringing in Richard Moat to head up T-Mobile in the UK, who of course is a former Orange man, suggests this deal has been in the pipeline for a while. They will have a firm strategy in mind.

I think O2 and Vodafone will carry on as normal. The market will consolidate. There is a notion that this could make the market less competitive, but I don’t believe that this is the case.

3 on the other hand may be kicking itself that it didn’t get involved in a  similar type of merger. It will be interesting to see what its next step is.  However I think there is too much focus on who’s number one or two in terms of market share. People will buy into a brand regardless, as long as the brand represents good service, value and innovation.

It will be interesting to see what is done with the retail estate. It’s very hard to get rid of retail shops – closing a whole host of them would result in huge loses. It will take a long time for it to work out what it’s going to do with its retail estate – you can’t have two Orange shops on the same street. On the retail side, this could slow things down radically.

 

Manny Hussain, managing director of federated Orange dealership Intek

“Shops will have to be shut on the high street and that can only be good for dealers”

This is a great deal for both parties. T-Mobile has struggled to maintain  consistency against its three main rivals and Orange will be given a new lease of life going forward.

Orange is regarded as the dealer champion and its view will prevail. T-Mobile has struggled in the channel apart from within  the M25, where it has a strong dealer presence. However, many of those that were solely connecting T-Mobile have now gone multi-network – such as Fonehouse.

Shops will have to be shut on the high street to avoid duplication and  that can only be good for dealers – less presence gives them less retail  opposition.

The new venture will have a marketshare of 37 per cent so Vodafone  and O2 will have to react and make aggressive moves. Vodafone has slowly been edging its way back into the independent channel, and its presence in Fonehouse stores illustrates this.

O2 has done very little to support most dealers and it may be wise to review that policy in order to claw back market share.

 

Adam Nyman, proprietor of T-Mobile dealer Complete Communications

“Dealers would have preferred to keep them as seperate entities”

I think the dealer channel would have preferred to keep them as separate entities. T-Mobile has a strong brand in the UK and customers are happy being on the network. Everyone will be sad to see T-Mobile go.

O2 and Vodafone will just continue on as normal and keep doing the things they’re doing. 3 will be the likely loser in all of this; it could become forgotten. You may see either O2 and Vodafone taking advantage of that by merging with it or taking it over in the near future.

 

Bob Sweetlove, business manager of Orange and T-Mobile airtime distributor HSC

“It will mean fewer network stores on the high street, and dealers will take a bigger slice as a result”

One of our primary focuses is the independent channel and the big question is will dealers get more or less to sell as a result of this joint venture? That’s unknown at the moment. Until the final approval is given, we’ll continue to sell both brands strongly.

It will most certainly mean less network stores on the high street. We want that channel and dealers to have an equal slice of the cake moving forward and this merger goes some way to achieving that.

There won’t be much change at O2 or Vodafone. Both have robust business plans so they won’t be derailed and there won’t be any problems. They’ll just keep on doing what took them to the position in the market they’re in now.

“There is also a notion 3 could be less secure as a result of this merger but like O2 and Vodafone, 3 will have a robust business plan in place.

 

Paul Leonard, managing director of Orange federated partner and T-Mobile dealer Sprint Communications

“O2 and Vodafone would rather have bought T-Mobile than see it merge with a rival”

The biggest challenge will be what it does with its retail portfolio. There’s the possibility there will be lots of duplication and, in this economic  climate, regulators will be concerned. Two Orange stores next to each other does not happen so there will probably be store closures and job losses.

O2 and Vodafone would rather have bought T-Mobile than see it and Orange merge. Not only will this move them both down a place in the market, it will inevitably have an impact on their shares and the value of their businesses. They’ll be kicking themselves they missed out.

Both will be looking to make aggressive moves to make up ground before the merger is totally complete and may even look to  poach customers to do this. They will hope Orange and T-Mobile take their feet off the gas as they look at integrating their businesses.

There won’t be any change at 3. I think it will see this as positive in that it has lost a competitor.

This is also positive for the independent channel. Most dealers tend to have a positive relationship with both of these networks and that will most likely continue.

 

Gary Bridger, managing director of Orange connector Airwaves

“This will kill us because of reduced volume of connections and commission”

The merger won’t make any difference to the dealer channel for at least a year. The networks take a long time to make changes, and any change they make won’t be drastic either.
 
Over the next year, we’ll see Orange take over and remove T-Mobile stores on the high street. The cost savings for the joint venture are phenomenal. It will be terrific for their businesses, and once the stores begin to shut down, they’ll see even more financial benefits.
 
Once the companies decide which brand name will prosper, the impact will be felt in the dealer channel. Dealers are already struggling to stay alive. This will kill us, because of the reduced amount of connections and competition.

 

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