Business Watch: There may be trouble ahead – 2012 in a nutshell


Dominic White looks ahead to what may happen in the industry this year, but thinks it will probably not surpass the events of 2011

For the industry’s biggest players, 2012 may struggle to be as momentous as last year.

From Steve Jobs’s death to Google’s audacious $12.5 billion bid for Motorola and Carphone Warehouse’s embarrassing exit from the world of megastores, 2011 was massive for mobile.

But, inevitably, this year will bring its own shocks and surprises. There will be startling new trends, the acceleration of existing ones and the demise of some major names.

In no particular order then, here are my best guesses at what’s in store for 2012 and why.

Vodafone will acquire Three from Hong Kong-based Hutchison Whampoa.

It’s a perennial prediction but it makes too much sense not to happen. Three lacks scale; Vodafone would like more.

The pair have already tied the knot in Australia, and relationships are strong between Vodafone chief executive Vittorio Colao and Hutch supremo Canning Fok.

With major spectrum auctions looming – more of which in a minute – the time is surely right for Hutch’s ageing chairman Li Ka-shing to give up the dream here and hand over the keys to a larger player.

Vodafone would have the backing of its investors, who have enjoyed a remarkable recovery in fortunes under Colao.

Vodafone shares are almost back to pre-credit crunch highs thanks to the prospect of resumed dividends from its cash-generative US joint venture Verizon Wireless.

Much of that cash will be returned to Vodafone shareholders but it clearly gives Colao more flexibility for acquisitions.

Struggling ventures
Vodafone shares, which are yielding almost eight per cent, will finally break through the £2 barrier again in the first half of 2012, cause for cheer for the many thousands of staff with shares and options who haven’t been used to making any money from them.

Meanwhile, after amassing billions of pounds of losses, Three has finally turned profitable, making it a far more attractive prospect.

Demand for smartphones, tablets and dongles will continue to rocket, keeping the mobile market in decent enough health despite weak consumer confidence and the possibility of a euro-collapse.

However, economic pressures will lead to further rounds of jobs cuts across the four mobile networks, which all trimmed headcount during 2011.

The most notable cutter was Everything Everywhere under its new chief Olaf Swantee, who will continue to squeeze the operation harder this year.

Swantee is under tremendous pressure from the group’s demanding shareholders, France Telecom and Deutsche Telekom, the latter of which has just had its attempt to sell T-Mobile USA to AT&T blocked, giving it yet more reason to cut costs in the UK.

Another joint venture that will continue to struggle in 2012 is Nokia’s controversial tie-up with Microsoft.

Microsoft showcased the capabilities of its new smartphone software last week in Las Vegas at the Consumer Electronics jamboree.

Despite massive scepticism, the US software titan and Nokia are showing signs of progress in the race to catch up with Apple and Google’s operating platforms for mobile devices.

However, the mobile networks have yet to back the new handsets with significant sales and promotion spending.

A huge amount of work needs to be done if Nokia is ever to recover its tremendous loss of market share. 2012 is the year in which that work will continue; it is not, though, the year in which it will achieve the results it ultimately wants.

Takeover tussle
2012 is however the year in which Nokia will be involved in a takeover battle royal for BlackBerry maker Research in Motion.

The Finnish giant will team up with Microsoft on a bid that will rival those from Amazon and Google, among others.

But first RIM’s beleaguered management will make further efforts to get unhappy investors off their backs.

The Canadian company’s co-chief executives Mike Lazaridis (pictured) and Jim Balsillie will agree to relinquish their joint chairmanship and bring in an outsider for the role in order to satisfy the corporate governance box tickers.

But it will not be enough to stop the company being vulnerable to takeover.

Full article in Mobile News issue 505 (January 16, 2012).

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