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More change in UK's mobile landscape

France Telecom could sell part of its stake in lead cellco EE, while the smallest player, 3UK, extends M2M model

By CAROLINE GABRIEL

Published: 16 November, 2012

READ MORE: M&A | UK | M2M | MVNO | LTE

In the latest news from the tumultuous UK mobile market, France Telecom is once again reported to be considering a reduction in its presence, while the fourth cellco, 3UK, is pushing its MVNO strategy further into the M2M growth market.

According to Bloomberg, France Telecom says it has been approached about selling part of its 50% stake in EE (formerly Everything Everywhere), the UK's largest cellco and a joint venture between FT Orange and Deutsche Telekom/T-Mobile. The JV is expected to have gained in value since it was cleared to launch LTE services, in refarmed 1.8GHz 2G spectrum, ahead of its three rivals. It has gone live with 4G services in major cities under its new EE brand, while the Orange and T-Mobile brands are confined to legacy offerings.


FT's CEO Stephane Richard said his firm had received approaches from several private equity investors which want a minority stake in EE, but insisted that "we want to keep control of the asset, and so do the Germans". Richard added: "That said, there is a possibility that we can give ourselves some financial headroom by opening EE's capital to a minority shareholder or through an IPO, but we haven't yet decided. We don't need cash today so there is no set deadline to decide on EE."

Last year, both partners were rumored to be considering an exit from the UK, as they battle to reduce debt at home. FT's CFO Gervais Pellissier said earlier this year that the firm would consider floating a stake in EE if the right circumstances arose, while DT was also said to be evaluating the option of a stake sale in the early part of this year.

Around the same time, EE's former CEO, Tom Alexander, was reported to have been in talks with several private equity groups, including KKR, about a buy-out valued between $13bn and $16bn. Such a deal would allow the venture to gain independence from its parents - last year it signalled such a medium term intention when it raised independent debt to repay part of its $2bn in shareholder loans.

Also in the UK, Hutchison's 3UK unit has long looked to a broad MVNO strategy to offset its status as the smallest network owner. It was the first to form partnerships with MVNO enablers (MVNEs), which recruit and manage large numbers of virtual operators on the carrier's behalf. It has now launched a cloud-based M2M platform. This goes even further than the MVNE approach in reducing the cost and set-up time for a virtual operator, by offering a web-based, self-service process with a cost level appropriate to the narrow margins of the embedded market.

3UK will base its service on Ericsson's M2M platform, and says MVNOs targeting M2M devices will be able to go live within two weeks. These partners, under the Three Wholesale division, will have their own-branded portal to control their connections and service levels, with functions such as activating and deactivating connections, tracking data usage patterns and applying data caps. The cellco said several partners are already planning to go live on this platform before year end, in sectors ranging from CCTV monitoring to traffic management.

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