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T-Mobile, Orange merge in UK

updated 08:30 am EDT, Tue September 8, 2009

UK divisions of T-Mobile and Orange unite

T-Mobile UK and Orange UK today unveiled plans to merge into a single company. The deal will cost between 600 million and 800 million ($982.4 million to $1.3 billion) to implement but should create the single largest British carrier to date, giving the combined entity about 37 percent of the market and 28.4 million users versus O2's 27 percent. Both also claim improvements for end users as the two should improve coverage by unifying their networks.

The two don't expect to settle on a merged brand until about 18 months after the deal is approved but do ultimately anticipate saving 3.5 billion ($5.7 billion) through eliminating redundant parts of each other's networks, such as unnecessarily overlapping cellular towers, stores and (likely) employees.

No timetable has been given for when the deal will complete, though it should need both British and European Union approval due to the French roots of Orange and the German origins of T-Mobile. It's not uncommon for European carriers to have as much or more market share than the proposed entity, but concerns exist that nearly all of the British market will be consolidated into three established carriers, with O2 and Vodafone taking much of what would be left.

The move was prompted by T-Mobile's poor financial health in the UK, which the company itself publicly admitted was leading it to consider nearly any option.

A successful union would create pressure on O2, whose iPhone exclusivity may be ending for at least the older iPhone 3G and could let multiple carriers finally offer Apple handsets in the UK. Until now, T-Mobile and Orange have primarily relied on deals for Android smartphones and other low-key exclusives to try and counter O2's deal.

by MacNN Staff



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