Setting the ringtone

T-Mobile is often seen as the UK’s fourth network, despite rumours it is set to buy O2. It would be best off boosting its own brand, says Robert Lester

Despite a notoriously bad track record on customer loyalty, the mobile phone sector has some of the strongest brands in business. O2 has replaced Orange as the darling of the industry, Vodafone has become a global behemoth in its own right, while 3 and Virgin Mobile are locked in an intriguing battle for the youth market. But T-Mobile is struggling, with its own chief executive admitting recently that the brand needs revitalising in the UK.

The company has embarked on a strategy of renting its network to an increasing number of mobile virtual network operators (MVNOs), including Virgin Mobile and easyMobile, but without Virgin’s 5.6 million customers T-Mobile has only 16.4 per cent of the UK market, according to global research company Strategy Analytics. It trails well behind its three main rivals – Vodafone, O2 and Orange – each of which have almost a quarter of the mobile subscribers in the UK.

Last week, T-Mobile launched its long-awaited Web’n’Walk internet service, as it seeks to boost its profile. Web’n’Walk gives customers unrestricted access to the Net through a portal that has Google as its homepage. The launch is being backed by a multi-million pound advertising campaign, created by Saatchi & Saatchi.

In recent months, however, speculation linking Deutsche Telekom-owned T-Mobile with a bid for O2 has made the headlines. T-Mobile chief executive René Obermann fuelled the rumours even further last week, saying: “Consolidation will help this market be healthier for the future. Whether we are the consolidator or whether it is somebody else is another topic.”

But analysts say a bid for O2 is unlikely in the short term, not least because of the regulatory issues that would arise from a merger of two of the UK’s biggest mobile networks.

Strategy Analytics senior analyst Sara Harris says continuing down the MVNO route is the safest option for T-Mobile. “At least that way, it is assured of revenues with the least risk or effort,” she says. “T-Mobile still suffers from the hangover of being seen as the cheap option in the UK. That was the perception of One 2 One, and even though it has rebranded it is still seen as a bit naff.”

T-Mobile has made music a key part of its strategy this year, and last week signed a multi-million pound sponsorship deal with pop star Robbie Williams. The deal will see the launch of a Sony Ericsson W800i phone featuring a pre-installed unreleased Williams song, while T-Mobile International will be the singer’s main sponsor until 2007.

But the company’s rivals argue it will take more than a high-profile celebrity partnership to solve T-Mobile’s problems. A source at a rival network says: “T-Mobile has no clear brand position and no point of difference. Decisions are generally made in Germany and the problems with the brand are symptomatic of that.”

In May, T-Mobile was ranked as the worst operator for customer service and reliability in both the pre-pay and contract markets, in one of the UK’s most authoritative consumer surveys. The annual JD Power survey measures customer satisfaction factors including service cost, brand image and customer service among more than 2,200 customers – T-Mobile ranked poorly for both brand and pricing in the survey.

The mobile industry has traditionally suffered a high customer churn rate and the main challenge facing all the operators is establishing a clear proposition for their brands, according to Interbrand chief executive Jez Frampton. He says T-Mobile has been making progress on this front.

“T-Mobile seems to have become more responsive to the UK market in the way it has been communicating and advertising in recent months,” says Frampton. “It’s extremely good at managing its corporate identity and, as a brand, it is doing no worse than any of the other operators.”

The Web’n’Walk activity is T-Mobile’s third high-profile ad campaign of the year, after U-Fix and Mates Rates. Marketing director Phil Chapman, who joined from Unilever in January, says the company’s recent marketing has been more focused. “The brand is now sharper and we’re building more awareness,” he says. “We’ve made a lot of progress this year. The comments about the T-Mobile brand being weak probably belong in the past: we’re concentrating on the future.”

Chapman claims the differentiation of T-Mobile’s services is its strength. He says that, unlike its competitors’ internet offerings, Web’n’Walk gives users the level of internet access they get from their home computers.

The challenge facing T-Mobile is clear and the company hopes the Williams deal and the launch of Web’n’Walk will help change some of the lingering negative perceptions of the brand. Speculation surrounding an O2 takeover shows no sign of abating, but T-Mobile must concentrate on breathing new life into its own brand if it is to make ground