Networking & Communications

O2 sale shows new global, shape-shifting world of telecoms

The news that Hutchison Whampoa of Hong Kong is buying Spanish giant Telefónica’s O2 (which acquired the mobile carrier from British Telecom) is surely a perfect microcosm for technology and communications globalisation.

Once telecoms giants were state-backed monopolies: AT&T in the US, NTT in Japan, BT in the UK, France Telecom, Deutsche Telekom in Germany and many, many others around the world were afforded impregnable fiefdoms. When regulators feared this was leading to a lack of competitiveness they deregulated and forced the advent of new competitors. In landline services at least, these rivals still often struggled to compete on even terms with the old national incumbents who had market share, networks and know-how on their sides - but it was a start.

In the infant world of mobile comms, competitiveness always appeared easier to pull off and so it has proven with the arrival of a bewildering number of new brands and mobile virtual network operators who could piggyback on others’ networks. As the landline world faded, the old incumbents responded with their own mobile capabilities and now, after several years we’re seeing true competition not only within countries but across borders and even continents.

The Hutchison-O2 deal is far from unique as companies seeking entrance to the mobile sector have become like frenzied children playing a high-stakes game of musical chairs.

Look at the UK. EE was formed via a joint-venture between Deutsche Telekom and France Télécom for the UK market and is now being acquired by BT. In between exiting and re-joining the cellular market, BT allied itself with Fon, a Spanish-born global WiFi hotspot community. BT has also been pushing hard in ICT services, creating a truly global network and consulting operation.

The digitisation of communications has allowed in other interesting entrants with global aspirations such as Reliance Communications and Tata Communications of India. Further afield, China Mobile, China Unicom, the UK’s Vodafone, Verizon of the US, Norway’s Telenor Group and Telstra of Australia have all shown their desire to crack new geographic markets.

As diaspora and the globalisation of economic opportunity has soared, everybody wants in on rival patches… and they won’t even stop at telecoms. Hutchison Whampoa’s retail brand Superdrug is about as well-known as its 3 mobile carrier brand. NTT in 2010 agreed to buy South Africa-originated IT services group Dimension Data, UK megabrands such as airline-to-banking group Virgin and supermarket firm Tesco are serious mobile players and Google and other internet/tech brands seem certain to follow. O2 meanwhile has been going the other way, edging into the entertainment business through ventures such as its naming rights for the Dome venue in London.

What this latest deal to acquire O2 epitomises is that telecoms today is like a mosaic or kaleidoscope. Everybody wants to be international, everybody wants to find adjacent markets. Of course, growing abroad in new businesses and new markets and it’s easy to think of flop combinations such as BT and AT&T’s Concert joint venture. But in this sector at least, Rudyard Kipling’s old line about “East is east and west is west and never the twain shall meet” is very much redundant.


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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