The British mobile phone landscape was today set for huge upheaval after the owner of T-Mobile said it wants to merge with Orange.
Deutsche Telekom, which was known to be considering selling T-Mobile outright, confirmed the exclusive talks between the two telecoms groups this morning.
Deutsche Telekom and France Telecom, which owns Orange, said they want create a new market leader in Britain, one of Europe’s toughest markets, which will leapfrog its two main UK rivals Vodafone and Telefónica’s O2.
A future with Orange would push Telefónica’s O2 off the top spot, with 37 per cent of the UK mobile market and a combined 28.4 million customers, excluding those of Virgin Mobile, which uses T-Mobile’s network.
In joint a statement, the companies said that both the T-Mobile and Orange brands will remain on the high street for 18 months after the deal is completed.
The companies said that during that period, they will review their “branding alternative”.
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October 12th, 2009 at 2:34 am
The merger of Orange UK and T-Mobile UK would create Britain’s biggest mobile operator. Photograph: Sang Tan/AP
The merger of Orange and T-Mobile faces a major regulatory hurdle after a last-minute deal thrashed out by the government with all five wireless networks designed to realise Gordon Brown’s vision of broadband for all by 2012.
The deal, to be announced this week, is likely to involve the Office of Fair Trading calling on EU regulators to allow the UK authorities to investigate the proposed merger, which has prompted howls of protest from consumer groups as it would create the UK’s largest mobile phone operator. The combined group would have a 37% share of the market.
Orange and T-Mobile could be forced to sell some of their mobile phone spectrum in Britain. At the least, an OFT request for UK regulatory scrutiny of the deal – leading to an investigation by the Competition Commission – would delay the merger.
After months of wrangling between industry and the government’s wireless spectrum adviser, Kip Meek, which culminated in Lord Mandelson calling the UK bosses of all five operators to a summit meeting last month, a deal has been struck which would impose caps on the amount of spectrum each operator can own.
Neither Vodafone nor O2 will be forced to give up any of their assets, but the deal says a “regulatory remedy” is needed to prevent the combined Orange and T-Mobile owning too big a share of the UK airwaves. In effect it calls on the OFT and Competition Commission to decide at what level to place a cap on the merged company’s spectrum.
The wrangling was prompted by the government’s Digital Britain plan. In January, then communications minister Lord Carter pledged to bring broadband services within reach of everyone in Britain by 2012. That needed the cooperation of the mobile phone networks to plug the gaps in existing fixed-line infrastructure with wireless broadband. Months of negotiations failed to reach a conclusion by the time of Lord Carter’s final report in June. He has since stood down, to be replaced by treasury minister, Stephen Timms.