T-Mobile, the European side, and France Telecom, better known as Orange, are forming a 50/50 joint venture that they’ll use to purchase “customer equipment, network equipment, service platforms and IT-Infrastructure”. In other words, in much the same way that Groupon allows customers to buy something for really cheap as long as 100 or 200 customers buy the same thing, this new joint venture is going to allow T-Mobile and France Telecom to buy in bulk from handset vendors and infrastructure providers. The two firms estimate that they’re going to save about 1.3 billion Euros over the next 3 years, which says a lot about the inefficiencies of running two separate networks and making several smaller capital expenditures versus fewer large purchases.
Would such a thing ever happen in the United States? Doubtful. Competition is fierce and operators hate each other. In Europe however there’s a form of mutual respect between the operators, who are equally competitive, but understand that mobile is an industry that grants you a license to print money, so if working together can help two competitors make even more cheese, than why not partner up? Pride? Bank accounts don’t know the word. Besides, operators in Europe are competing with each other less and less, and more with Google and Apple on who gets to own the customer relationship and take home the bacon. This will only become more apparent with time.
“Nothing motivates like money and the goal of securing €1.3 billion in annualised savings by 2014 will certainly give strong impetus to the joint venture. What is more, the procurement plans announced today only cover the one-third of the two groups’ combined annual spend of around €40 billion that is deemed “immediately accessible”, a sure sign that there is scope for additional synergies further down the line,” said Thomas Wehmeier, Principal Analyst at Informa Telecoms & Media.
[Via: Telecoms]