Will pure-play mobile have a role in Europe?

It has been widely speculated this week that Deutsche Telekom is considering selling its mobile unit in the Netherlands in a deal that could be worth almost €5 billion ($5.7 billion), according to various sources. Liberty Global and private investors have been cited as potential interested parties.

Deutsche Telekom has declined to comment on the reports, but one reason for a potential sale would likely be that T-Mobile Netherlands is one of the few pure-play mobile operators in the German company's portfolio.

Indeed, the German operator has made no secret of the fact it is pursuing a convergence strategy. It is already rolling out its 'Magenta One' quad-play strategy across its European footprint.

What's more, T-Mobile faces growing multi-service competition in the Netherlands. KPN has been offering a quad-play proposition for some time under the KPN Complete range, and Vodafone Netherlands only recently unveiled its new Power-up strategy that allow mobile and fixed plans to be bundled together. Cable operator Ziggo also sells mobile services, while alternative fixed operator Tele2 Netherlands is rolling out a 4G network and looks to be on the verge of launching services; it already sells mobile services as an MVNO.

T-Mobile Netherlands, meanwhile, has not come up with a multi-play proposal and remains the country's third-largest mobile network operator with a 15-20 per cent share of the market by revenue.

Deutsche Telekom has also already sold -- or is in the process of selling -- its stake in UK-based EE, which is to become part of a converged operator with BT if regulatory approval is obtained. Indeed, a recent report from CCS Insight also suggested that multi-play will continue to disrupt the UK market, with the number of households purchasing bundles of four services to double in 2016, up from an expected 1.5 million households in 2015.

Is pure-play a dying breed? In our recent report on leading quad-play markets in Europe, Natasha Rybak, principal analyst at Current Analysis, noted that quad-play or multi-play is not a universal prescription for customer satisfaction, and said there is still some room for specialist fixed and mobile players to address the needs of some customer segments.

However, pure-play in Europe looks set to become a very specific strategy requiring a specific focus -- one that Deutsche Telekom for its part no longer seems prepared to contemplate.--Anne

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