Zacks Equity Research Announces Key Insights on European Telecom Companies

Strategic Insights -

The proposed merger of Deutsche Telekom (DT) and France Telecom's (FTE) UK units has faced the possibility of an investigation by the Office of Fair Trading (OFT), the UK antitrust watchdog. The two companies had announced their merger plan in September 2009 and filed their appeals to the European Commission for approval in January 2010. If approved, the merger would create a historic combination of T-mobile UK and Orange UK. The British mobile market is one of the fiercely competitive markets in Europe, with Spanish telecom giant Telefonica's (TEF) UK subsidiary O2 leading the market with an approximately 28% share.

Key Takeaways:

  • The proposed merger of Deutsche Telekom and France Telecom's UK units faces the possibility of an investigation by the Office of Fair Trading (OFT), the UK antitrust watchdog.
  • The merger, if approved, would create a historic combination of T-mobile UK and Orange UK, with a combined market share of approximately 45%.
  • The British mobile market is one of the fiercely competitive markets in Europe, with Telefonica's (TEF) UK subsidiary O2 leading the market with an approximately 28% share.
  • Vodafone (VOD) and France Telecom's Orange are the second and third largest operators with 24.7% and 21.5% share, respectively.
  • T-Mobile UK is the fourth largest operator with a roughly 15% market share.
  • CIGNA Corporation's (CI) fourth quarter operating earnings of $1.03 per share were ahead of the Zacks Consensus Estimate of 96 cents.
  • The company's reinsurance business performance improved due to the equity market, and its accident insurance business also showed strong results.
  • Quarterly net income was $330 million or $1.19 per share, compared with a net loss of $209 million or 77 cents per share a year earlier.

Statistics:

  • The proposed merger of Deutsche Telekom and France Telecom's UK units could potentially subdue competition in the UK wireless market.
  • The OFT has reportedly sought European Commission's permission to scrutinize the merger deal, which could delay the merger until 2011 or potentially block the deal in a worst-case scenario.
  • The British mobile market has a total of 5 major operators, with Telefonica's (TEF) UK subsidiary O2 leading the market with an approximately 28% share.
  • Vodafone (VOD) and France Telecom's Orange have a combined market share of approximately 46%, while T-Mobile UK has a roughly 15% market share.

Sources:

  • Zacks Equity Research: [http://www.zacks.com/](http://www.zacks.com/)
  • Deutsche Telekom (DT): [NYSE: DT]
  • France Telecom (FTE): [NYSE: FTE]
  • Telefonica (TEF): [NYSE: TEF]
  • Vodafone (VOD): [NYSE: VOD]
  • CIGNA Corporation (CI): [NYSE: CI]
  • Office of Fair Trading (OFT): [http://www.oft.gov.uk/](http://www.oft.gov.uk/)