European mobile firms join forces

Together, the four firms will dwarf Vodafone

Four of Europe's biggest mobile phone firms have unveiled an alliance, in an attempt to wrest back the initiative from market leader Vodafone.

Germany's T-Mobile, France's Orange, Spain's Telefonica and Italian TIM began talks on cooperation last year.

Now, they have unveiled a joint brand - FreeMove - and promise to roll out shared services this year.

With 230 million subscribers worldwide, FreeMove hopes to offer a seamless service across all its member networks.

In addition, the firms hope to benefit from economies of scale, especially in purchasing handsets.

Getting together

FreeMove will initially focus mainly on the European business market, which it says is worth 4bn euros (£2.7bn; $4.9bn).

But it eventually plans to roll out services across its members' entire networks, including in the Americas.

The group has struck a deal with Motorola and Siemens to provide handsets: it has already bought 6 million phones at an average cost saving of 10%.

FreeMove is the second such alliance in the European mobile market, dwarfing a venture between nine firms including Britain's MMO2, Swiss-based Sunrise and Norway's Telenor.

A number of mobile operators have also pooled their efforts to invest in expensive third-generation network technology.

The idea of alliances has caught on quickest in the airline industry, being a cheap way for primarily national companies to extend their global service.

In mobile telecoms, the increasing demand for international roaming services have driven providers to work together more closely.

Competition hots up

The main spur for FreeMove, however, is the increasing domination of Vodafone, which alone has more than 130 million subscribers.

Although all four firms in FreeMove are active internationally, none has pushed its brand so aggressively into overseas markets as the British firm.

By offering a single standard of service across as many as 21 European countries, FreeMove will be able to offer its customers a highly competitive product.

And the venture plans to apply joint bulk purchasing to one-quarter of its overall procurement, resulting in potentially significant savings.

But analysts are sceptical that relatively loose alliances can be made to gel in strategic terms.

During the 1990s, a string of telecoms and hi-tech firms set up partnerships, but few lasted beyond the downturn earlier this decade.