Orange and T-Mobile to merge

 

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By Stuart Turton

Posted on 8 Sep 2009 at 08:11

Orange and T-Mobile are to merge, creating the UK's largest mobile-phone company with 28 million customers and a 37% share of the market.

Orange and T-Mobile are currently the country's third and fourth largest providers respectively, but the deal will catapult them ahead of market leader O2 - which enjoys a 27% market share.

The merged company will be run as a joint venture with parent companies Deutsche Telekom and France Telecom each loaning the entity £625 million. The venture will have combined earnings of £8.2 billion, and just under 20,000 staff.

However, the companies have announced it will cost between £600 million and £800 million between 2010 and 2014 to integrate the businesses - which will include decommissioning mobile phone masts, cutting jobs and shutting down high-street stores.

This deal will provide strong benefits for our customers through improved coverage, quality of service and an enhanced capacity to develop new services

The companies say the two brands will co-exist for the next 18 months, with one likely to be scrapped at the end of that time. They expect this to bring cost savings of £3.5 billion.

According to a statement, the deal will result in stronger network coverage and a more reliable 3G service. The companies also claim they will look to reinvest the cost savings into next-generation network technologies.

"This will reinforce fair competition and will provide strong benefits for our customers through improved coverage, quality of service and an enhanced capacity to develop new services and technologies," they say in a statement.

The deal is expected to close in October, and will come as particularly good news to T-Mobile, which took a £1.6 billion hit in May after losing 87,000 customers to rivals.