EE Helps Shake Up Sector Once Dominated by Vodafone and O2
Over the past few years, shifts in the UK business market have been changing the landscape for mobile operators. EE in particular has been a major contributor to these changes and it will look to heap further pressure on rivals.
The UK business market for mobile operators is undergoing arguably its greatest change in many years. Several factors have contributed, including EE’s emergence as a major competitor, the deployment of strategies increasingly focussed on convergence and a flurry of mergers and acquisitions.
In my view, EE’s deployment of a market-leading LTE network has been central to the shake-up. It helped the operator challenge the dominance of Vodafone and O2, leading to a more competitive and evenly distributed market.
EE’s progress is particularly commendable given the relatively weak positions in the business market held by Orange and T-Mobile at the time of their merger in 2010. It capitalised on a ruling by Ofcom to launch LTE ahead of rivals and relentlessly sought to maintain network leadership. In 2015, EE grew its corporate LTE accounts by 30 percent. Recently, it announced plans to reach 95 percent geographical LTE coverage by 2020, an impressive ambition that will heap further pressure on rivals that have failed to make in-roads into its dominance.
A word of warning though — while the combined BT and EE entity owns assets capable of creating a formidable competitor, the complex integration of the UK’s largest fixed-line and mobile networks brings considerable technical and cultural challenges. These will take time to overcome and could present opportunities for rivals.
Vodafone could be one beneficiary. Pegged back by EE and threatened by activity in mergers and acquisitions, from which it has been notably absent since buying Cable & Wireless Worldwide in 2012, Vodafone needs to find new momentum. Historically, it has enjoyed strong success in the business market, driven by a culture of innovation. Indeed, it still sees about 50 percent of its UK revenue coming from this market, a far greater proportion than in its European operations.
The company hopes that a recent reorganisation of its sales force could galvanise fortunes. It’s moving from a nationwide to a regional approach, aimed at forging closer relationships with customers. The move is shrewd and well-timed and is reminiscent of the structure BT already has in place.
O2 is enjoying strong momentum in the business market, an impressive feat given Telefonica’s desire to exit the UK and the uncertainty surrounding its failed takeover. It’s been particularly successful in the public sector, a market it identified as prime for disruption. The springboard was O2’s launch of its No. 10 tariff in 2015, a simple offer that included unlimited calls and 1GB of LTE data for a flat rate of £10 per month.
Of course, a clear challenge for O2 is to maintain momentum beyond mobility without fixed-line assets as the UK increasingly moves toward converged services. It will also seek to capitalise on the acquisition of Weve in 2015 to tap further into the rapidly growing UK mobile advertising industry (see O2 Looks to Weve New Revenue from Mobile Advertising).
For sure, this is a market very much with everything to play for and where further transformation is almost certainly guaranteed.
CCS Insight’s recently published report, Changes in the UK Business Telecom Market, analyses the UK business market in detail and assesses the strategies of mobile providers. If you’d like a copy, simply contact firstname.lastname@example.org.
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