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2006 Wrap Up. 2007 Predictions.

29th December 2006

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2006 was yet another busy year for the mobile phone industry. One of the common themes for the year was consolidation, something that it likely to accelerate during 2007.. at least as far as manufacturers are concerned.

As usual, there will be a huge number of handset announcements at the start of the year, peaking with 3GSM in February. This year has shown that manufacturers have been anxious to move handsets from "coming soon" to production as soon as possible, so expect a major shake up in the retail market by mid 2007.

Carriers and Networks

 Major Mobile Carriers / Networks The five biggest multinational carriers are Vodafone, T-Mobile, Telefónica (who own O2), Orange and 3. Most of these carriers consolidated some time ago, and there's been a fair amount of stability in this sector since the 2005 Telefónica acquisition of O2.

The big question during 2007 will be the future of 3. 3G hasn't performed very well as an investment, and 3 is pretty much a pure play 3G carrier. There have been rumours for some time that Hutchison Whampoa (3's parent company) may dispose of its European networks to another carrier. In the mean time, Hutchison's strategy has been to slash jobs and introduce the X-Series tariff. The flat rate 3G that X-Series offers can be viewed either as a stroke of genius.. or an act of desperation.

Vodafone has recently been buying and selling stakes in several mobile businesses, divesting itself of some long-running investments (such as a 25% share in Swisscom) while looking to buy other operators, outright. However, Vodafone is still paying the price for previous acquisitions (including Mannesmann in 2000) which have wiped billions of pounds off the company's assets. Internal boardroom squabbles may also prove fateful for Vodafone.

Telefónica appears to be extending the O2 brand, renaming its recently acquired Czech and Slovak operations with the "O2" brand instead of Telefónica's more usual movistar brand. It's likely that all future acquisitions in non-Hispanic countries will be branded as O2.

France Telecom, owner of Orange have been unifying their non-French services under the "Orange" name, offering fixed line telephony, broadband and mobile services under one brand. However, quality has been slipping, especially in the UK where there have been high-profile outages of mobile service and broadband connectivity.. Orange shows no real sign of improvement and this will most likely be reflected by a significant drop in market share. T-Mobile is owned by Deutsche Telekom, a firm that is likely to try to follow suit into the "triple play" market.

MVNOs (Mobile Virtual Network Operators) such as Virgin Mobile continue to gain ground worldwide, although the UK market is pretty saturated with MVNOs at the moment. Virgin Mobile's owner, NTL Group is aiming to launch "quadruple play" in the UK, combining digital TV, fixed line telephone, broadband and mobile phone services. BT are in a similar position - an MVNO with a substantial fixed line and broadband business, but with limited access to the digital TV market. 2007 will (as usual) have its fair share of takeover speculation about BT, our guess is that some sort of tie-up with Telefónica is the most likely (reuniting it with the ex-BT Cellnet O2 business), but so far BT has managed to avoid takeover bids.

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