T-Mobile UK SWOT and PESTLE Analysis

Introduction

Last year T-Mobile UK was considered to be one of the largest mobile operators in the world with more than 150 million customers worldwide and being the service provider of at least 17 million customers in the United Kingdom the size and coverage of this company is significant. But due to tough economic times T-Mobile decided to merge with Orange Mobile. Their union was approved early this year and as a result T-Mobile UK became the number one mobile operator in the UK and considerably strengthened its position as a powerhouse not only in the UK and Europe but even the world. This study will attempt to understand T-Mobile in depth and can be done by using the SWOT and PESTLE analysis framework.

SWOT Analysis

A SWOT analysis is comprised of two parts. The first one is internal and the second one is external. The strengths and weaknesses of the company comprise the internal aspect of the analysis while the opportunities and threats are those that comprise the external. This simply means that internal forces are the things that the company has direct control over with and the external forces are those that the company has no control.

Strengths

The overall strength and dominance of T-Mobile UK can be understood by looking at the numbers. As mentioned earlier the hundreds of millions of customers around the world as well as the millions of subscribers in Europe attest to its status as one of the four major mobile operators in the United Kingdom (BIS, 2010). Its official website boasts of the following facts and figures (T-Mobile UK, 2010):

• 5000 employees.
• 294 retail stores across the UK.
• 2G network covering 99% of the population.
• 3G network covering 93% of the population.
• Awarded the Best Mobile Broadband by the UK Mobile Industry in 2010.

The popularity of wireless communication and the continuous demand for better products and services related to telecommunication and mobile networking can always assure shareholders of T-Mobile UK that good times are up ahead. Their position was strengthened even further by their bold decision to merge with another major mobile operator and by striking a deal with a major 3G provider to further increase their coverage by the end of this year (Roome, 2010).

When the public discovered the possible merger of T-Mobile UK and another juggernaut, Orange Mobile, it created an uproar that prompted many to call for investigation because of the potential impact of the said merger because the two companies can corner more or less 40% of the market share (Treanor & Wray, 2010). The merger pushed through anyway and as a result, T-Mobile and Orange country have now a combined 29.5 million customers, overtaking competitors like Vodafone and O2 to become UK’s largest mobile operator (Clark, 2010).

Weakness

It seems that T-Mobile can do nothing wrong and it is therefore not easy to detect any major weakness. It seems that they have covered all the bases so to speak. However, one can argue that its size and the recent merger can become a source of problems down the road. As many are well aware not all mergers had a happy ending. Two companies with different ideas and visions will require time to mesh together and work as one unit. In some instances, the merger only looked good on paper but when business leaders and employees from the two camps joined forces, synergy was never achieved. The same thing can happen to T-Mobile and it is too early to tell if the merger is indeed the best move for the telecom giant.

The merger also revealed a major issue from a financial standpoint. A merger usually occurs because two competing forces are no longer able to survive if they keep on butting heads. The United Kingdom’s Department for Business Innovation and Skills may have the same opinion when it made the statement that: “The UK mobile market is considered to be one of the most competitive in the world…” (BIS, 2010). If T-Mobile was forced into a merger then it means that the company is not yet out of the woods even after 2010. It has to be careful in dealing with competition and be vigilant with its financial position in order to thrive and not just survive.

Opportunities

On their website, T-Mobile announced enticing offers with the latest smartphones powered by the latest technology e.g. Android phones that can be had at lower rates. There is also an announcement of the anticipated arrival of the Apple iPhone 4. Millions of people desire to have an iPhone 4. This device does not only attract new customers, but the technology within an iPhone can also create a whole new set of income streams for T-Mobile. The demand for new products and new technology can be needed boost that can further cement the dominance of T-Mobile UK.

Threats

The future of T-Mobile seems to be bright as day but there are dark clouds threatening to mess up their plans. The current global financial crisis is forcing many to cut down on expenditures. Parents are keeping watch on their children’s mobile phone usage. The cost-cutting measures can force mobile operators to lower their prices and this can make it difficult for everyone to stay afloat. There is also the problem with Voice Over Internet Protocol or VOIP that can eat up into their market share.

PESTLE Analysis

Political

T-Mobile is in Europe and its head office is in the United Kingdom. There is nothing much that can be said about the political aspect of their operations except to say that this company is in one of the most stable and safest regions in the world to conduct business. As one analyst would like to put it, “Government stability is not a major issue in Western economies.” (Henry, 2008). The UK government only regulates the economy through legislation and taxation but apart from those activities, firms have a free hand when it comes to expanding their business and satisfy the expectations of their various stakeholders.

Economic

The economic conditions in Europe and even the rest of the world cannot be described as great. The financial crisis has affected almost everybody and this has led to a slow down in consumption and perhaps the major reason why T-Mobile was aggressive in pursuing a merger with Orange Mobile. The cost of living continues to rise and therefore people are now wiser when it comes to determining the things that they really need as opposed to buying things that they believe to be a luxury item rather than as a necessity. This can really cut into the revenue of any company especially one that sells electronic gadgets such as mobile phones.

Social

There can be two ways to look into the social aspect of T-Mobile’s business. The first one is the social stability of the countries wherein T-Mobile chose to build stores and establish its presence. The bulk of their business is done in the UK and in countries that are members of the European Union. This means that social unrest is not a major issue. The second way to look at this aspect using the PESTLE framework is to appreciate the social impact created by mobile phones and it is common knowledge that for many people living in progressive societies and urban centers all over the world it is now almost impossible to leave the house without a mobile phone at hand. This is good news for a company that sells mobile phones and wireless services.

Technology

A decade ago mobile phones are known for two things, the convenience of making and receiving calls away from the home and the office and also the convenience of sending and receiving text messages. These two features were enough to change the way people live but today the mobile phone can offer much more such as email access, internet TV, and the ability to download and upload songs, images, videos, etc. New software and more sophisticated hardware can open up a lot of opportunities for T-Mobile. On the other hand, technology can be a major obstacle to future growth. Think about Skype and various forms of VOIP technology and the threat to T-Mobile becomes clear.

Legal

The dominance of the recently merged T-Mobile and Orange Mobile can also become their weakness because all eyes are on them. The merger had to go through the eye of the needle so to speak because many are raising issues related to antitrust laws (Campbell, 2010). T-Mobile is used to these kinds of criticisms; in fact, in 2007 the English High Court granted an interim injunction that compelled the company to provide network connectivity services to Software Cellular Network Limited (Subiotto & Snelders, 2008). In the recently concluded merger, T-Mobile was able to steer clear from the objection of critics who had every right to worry about its potential impact on competition. But this does not mean that future issues will not surface especially now that T-Mobile is the largest in the UK.

Environment

Selling mobile phones and constructing cell sites or whatever is needed to provide 2G or 3G connectivity does not result in a major environmental problem for service providers like T-Mobile. In other words, mobile operators need not contend with hazardous waste and the need to participate in non-sustainable practices. Nevertheless, T-Mobile is very much concerned about the environment, so much so that they are always on the lookout for ways to minimize the health impact of their base stations and masts (T-Mobile UK, 2010). In addition to that, the company is vigorously pursuing a phone recycling service that will encourage customers to bring their old phones to T-Mobile stores and receive some form of the cash incentive.

Forecast

The newly merged company will have to attempt to work together as one unit and this will create inevitable friction within the organization. If the company can weather the storm then this company will be a force to contend with in the year 2011. There is a possibility that other mobile operators will merge as well or forge partnerships with others to be able to compete with T-Mobile and Orange Mobile. When all goes as plan the company will be able to increase its coverage in both 2G and 3G wireless services. The company will also be able to lower their cost and offer much cheaper products and services. The competition in this industry will be as fierce as ever. Hopefully, the general public and loyal customers will benefit from it.

Conclusion

The merger with Orange Mobile catapulted T-Mobile UK to the top of the UK and European mobile industry. There is no indication of any major weakness except perhaps the danger that the merger will create problems down the road. The company had to be careful with the impact of the current global financial crisis and be always on the alert regarding the threat of new technology such as VOIP that can take a healthy slice from their market share. Other than that T-Mobile is a juggernaut in the mobile industry and it is in an enviable or precarious position depending on one’s point of view.

References

1. Campbell, M. (2010). “Orange, T-Mobile Deal a Competition Threat, UK says”.
2. Clark, N. (2010). “EU approves Orange and T-Mobile merger”. The Independent. Web.
3. Department for Business Innovation & Skills. (2010). “Mobile Communications.”
4. Henry, A. (2008). Understanding Strategic Management. New York: Oxford University Press.
5. Roome, B. (2010). “T-Mobile and 3 UK build Europe’s largest shared 3G network”. Web.
6. Subiotto, R. & R. Snelders. (2008). Antitrust Developments in Europe 2007. UK: Kluwer.
7. T-Mobile UK. (2010).
8. Treanor, J. & R. Wray. (2010). “Orange and T-Mobile merger: Consumer groups back UK inquiry.” Guardian.co.uk.