Orange, T-Mobile to unite in U.K. merger

The union of the two companies would create the biggest wireless carrier in the U.K., with more than one-third of the market.

Orange and T-Mobile are to merge their British operations to create the U.K.'s largest mobile carrier, their parent companies said Tuesday.

The as-yet-unnamed joint venture will have a combined customer base of about 28.4 million people, or 37 percent of the market, with the deal expected to complete in November. Orange chief executive Tom Alexander will be chief executive of the new company, with T-Mobile UK chief executive Richard Moat as chief operating officer.

The companies said the merger will cost between 400 million and 600 million pounds ($655 million and $983 million). It is expected to deliver savings of around half-a-billion pounds per year by 2014, by removing duplicate base stations and retail outlets, as well as other efficiencies in operational staff and customer support.

Timotheus Höttges, chief financial officer of T-Mobile UK's parent company, Deutsche Telekom, said in a statement: "We will become [the] market leader--our customers will benefit in many ways, for example from the best mobile broadband offer in Britain.

"In the second-biggest market in Europe, which is undoubtedly one of the toughest and most competitive, we are giving T-Mobile UK a clear and strong future."

The deal will include T-Mobile UK's 50 percent holding in its 3G network joint venture with Hutchison. It is not known how or if the deal will affect the status of Virgin Mobile , which runs on T-Mobile's network.

Deutsche Telekom lost 600 million euros ($860 million) in the first half of 2009, down from 1.3 billion euros profit in the same period last year, with its T-Mobile UK division writing off 1.8 billion euros and losing 100,000 customers. The period saw gains in the German company's other European mobile operations.

Orange said its U.K. first half sales were down 2.6 percent from last year, at 2.54 billion euros. Orange 's parent company is France Telecom.

The deal will need shareholder approval from both companies and will also have to be cleared by British and European regulators. The U.K. mobile telecommunications market is widely regarded as highly competitive, and no regulatory problems are anticipated.

Rupert Goodwins of ZDNet UK reported from London.

 

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