O2 CEO Ronan Dunne Predicts UK Market Consolidation Boost

O2 CEO Ronan Dunne

The mobile industry in the UK would benefit from shrinking down to just three or four companies, according to CEO of Telefonica-owned O2 Ronan Dunne. There has been much speculation that Deutsche Telekom (NYSE: DT) is seeking a buyer for its T-Mobile network in the UK and although O2 has yet to declare itself a bidder, Dunne tells FT.com that consolidation would slow the rate of decline in UK mobile operators’ profit margins and rejects the notion less competition would lead to higher prices: consumers shouldn’t have “any concern”.

Market consolidation: Analysts have suggested that a reduction of the main group of UK operators — Telefonica (NYSE: TEF), Vodafone (NYSE: VOD), Deutsche Telekom, France Telecom (NYSE: FTE) and 3 — from five to four would would mean better returns and a more efficient market. Dunne seems to share that view and according to an interview with FT.com, thinks that if UK competition authorities allow the market to shrink to four, they should pass a follow-on deal to reduce the market to just three companies. O2 told us last week it was monitoring the T-Mobile situation “with interest” although it rejected reports it had already made a bid for the struggling company as “pure speculation”. But what if O2 loses out and rival Vodfone gets its hands on T-Mobile, giving it a 40 percent share of UK mobile customer revenue? Dunne says O2 can compete even if that happen and that his day-to-day focus is “kicking the hell out of the competition in the UK”

Revenue hopes: O2 can increase its revenue this year, according to Dunne, despite predictions that the UK mobile industry’s revenue overall will be flat or slightly down on 2009. “We

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