T-Mobile and Orange are to merge their UK businesses, creating a mobile phone giant with 28.4 million customers. The deal between Orange-owner France Telecom and Deutsche Telekom’s T-Mobile UK will create a business with sales of £8.2bn. The new group will have about 37% of the mobile market, overtaking current market leader O2. T-Mobile is currently the fourth-largest mobile operator in the UK, with a 15% share of the market. O2 has a 27% share, followed by Vodafone (25%) and Orange (22%).
The deal is due to be signed by November, with the companies hoping the merger will bring would bring expanded network coverage, better network quality and improved customer services.
However it is likely that competition authorities in the UK and EU will probe the deal. Both brands will remain separate for the first 18 months after the deal is completed while branding is reviewed. Orange chief executive Tom Alexander will lead the new company, with T-Mobile’s UK boss Richard Moat as chief operating officer.
Orange employs 12,500 people in the UK, while T-Mobile has UK workforce of 6,500. Integrating the business will cost between £600m and £800m, the firms said. This bill would include decommissioning mobile phone masts, cutting back the network of stores and streamlining other operations. Over time, savings should reach about £3.5bn, they added.
Commenting on the news that T-Mobile has said it wants to merge with Orange, James Parker, mobiles manager at moneysupermarket.com said: “This merger would mean a huge change for the UK mobile industry. Orange and T-Mobile combined will become the largest mobile provider with over 28 million customers and a 37 per cent market share, 10 per cent more than the current leading provider O2.
“If this merger does go ahead then it will ultimately mean one less mobile operator in the UK market and could potentially mean less choice for the consumer. T-Mobile may currently be one of the smaller players but it has been creative with its tariffs and Orange also has unique deals such as Orange Wednesdays.
“Ofcom will have a role to play in this merger and should do all it can to ensure that the best interests of the consumer are taken in to consideration at every stage. There will be many customers of both Orange and T-mobile who have questions on what this will mean for them and whether the talk of better customer service and network coverage will actually be delivered if the merger is given the go ahead.”