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Tuesday, October 31, 2006

3Q06: TDC German & UK MVNOs

TDC fully owns a Service Provider (Talkline) and partially owns a MVNO, easymobile, which operate in Germany and the UK. As expected, customer numbers are up (3.5m v 3.1m, but revenues (DKK 1990 v DKK 2005) and EBITDA (DKK 143m v DKK 159m) are down year-on-year. These 3Q 2006 figures were released this morning as part of the TDC results. The reason given for the decline is lower commissions in Germany. This doesn’t exactly bode well for Carphone Interims on Thursday.

DKK 143 is only £12.8m and these results are before any depreciation which should be small and head office mindshare which could be quite substantial. In the overall context of TDC, these figures are miniscule and given the prospect for MVNOs are not exactly awe-inspiring; it doesn’t make a lot of sense for TDC to retain ownership. It is hardly surprising that all the German Service Providers are thinking of merging.

Overall, more evidence to support my theory that MVNOs only work in markets where rapid growth is occurring and the network operators are not focussing on every part of the market. In the long term, all MVNOs will get squeezed out of business.