T-Mobile seals Orange deal to create 'UK champion'

Orange and T-Mobile are set to create "a new UK champion" after their European parent companies confirmed the mobile phone groups will merge.

After weeks of negotiations and rival offers from O2 and Vodafone, the owner of T-Mobile UK, Deutsche Telekom, and Orange's parent, France Telecom, yesterday announced the exclusive negotiations to form a 50:50 joint venture.

The deal, which is expected to complete next year, will create the largest mobile operator in the UK with 28.4 million customers, representing 37 per cent of the market's subscribers. Their closest rival, O2, has 27 per cent. O2 and Vodafone, who tabled bids for T-Mobile last month, declined to comment.

Matt Hatton, the principal analyst at Analysys Mason, said: "This is a very big deal for the UK market. It is good for Orange and T-Mobile because, for network operators, it is all about scale; generally the bigger the better."

The venture will be headed by Tom Alexander, the chief executive of Orange, with Richard Moat, brought in to head T-Mobile UK in May, becoming the chief operating officer.

Mr Moat said: "Deutsche Telekom looked at a number of M&A opportunities and an organic turnaround strategy for T-Mobile UK. They decided this was the best route for the shareholders and the business." Mr Alexander added: "The scale gives Orange opportunities to become more competitive."

The two companies said the deal would bring "substantial benefits to UK consumers". It will expand the network coverage, and the quality of their G and 3G services. "It's about building the best network, not just the biggest," Mr Alexander said. The company added that the merger should generate synergies of €4bn (£3.5bn) through combining network and IT operations, cutting site rental and maintenance costs as well as, inevitably, reducing staff numbers.

The group plans to expand its operations in the smartphone market. Mr Alexander said: "The whole vision is to build a network that's very strong for supporting new devices. It is much more than just about voice and text."

Customer bills are unlikely to fall in the wake of the tie-up. Mr Hatton, of Analysys Mason, said: "UK consumers get a pretty good deal and the margins are tight, so I wouldn't anticipate any great price discount."

The two brands will continue to operate independently for 18 months after the deal is signed, before the management decides on a single name for the fully integrated group in 2012. Tim Höttges, the chief financial officer of Deutsche Telekom, said it was the first step in "creating a new UK champion" in a market "which is undoubtedly one of the toughest and most competitive".

The deal is likely to face scrutiny from regulators in the UK and Europe. Yet, Mr Höttges said: "We do not expect big remedies for the deal. We don't believe the market dynamic will lose momentum as a result." Credit Suisse was not so sure: "On its own the European Commission might pass the deal quite fast. But the UK could complicate and slow down the process, given the Ofcom review of the UK mobile market, the coming spectrum auction and the GSM refarming question."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
PROMOTED VIDEO
News
i100
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
Arts and Entertainment
L to R: Hawkeye (Jeremy Renner), Captain America (Chris Evans) & Black Widow (Scarlett Johansson) in Avengers Assemble
film
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
Arts and Entertainment
Pharrell Williams' “Happy” was the most searched-for song lyric of 2014
musicThe power of song never greater, according to our internet searches
Sport
Tim Sherwood raises his hand after the 1-0 victory over Stoke
footballFormer Tottenham boss leads list of candidates to replace Neil Warnock
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Arts and Entertainment
Roffey says: 'All of us carry shame and taboo around about our sexuality. But I was determined not to let shame stop me writing my memoir.'
books
News
i100
News
Caplan says of Jacobs: 'She is a very collaborative director, and gives actors a lot of freedom. She makes things happen.'
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
Say it with... lyrics: The power of song was never greater, according to our internet searches

Say it with... lyrics

The power of song was never greater, according to our internet searches
Professor Danielle George: On a mission to bring back the art of 'thinkering'

The joys of 'thinkering'

Professor Danielle George on why we have to nurture tomorrow's scientists today
Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

Monique Roffey interview

The author on father figures, the nation's narcissism and New Year reflections
Introducing my anti-heroes of 2014

Introducing my anti-heroes of 2014

Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
DJ Taylor: Good taste? It's all a matter of timing...

Good taste? It's all a matter of timing...

It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

How we met

Olivia Jacobs and Ben Caplan
Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

Bill Granger's healthy breakfasts

Our chef's healthy recipes are perfect if you've overindulged during the festive season
Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

Who does your club need in the transfer window?

Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

Michael Calvin's Last Word

From aliens at FA to yak’s milk in the Tour, here’s to 2015