Mobile giants Orange and T-Mobile given approval to merge

A merge between mobile giants Orange and T-Mobile has been given the go ahead by European regulators, clearing the path for the two companies to combine forces to create a UK customer base of almost 30 million.

It has been confirmed the two companies with begin integration with immediate effect, with plans for the merger to be completed by spring this year.

After finding out they had been given the green light to join forces Gervais Pellissier, deputy chief executive and chief financial officers of Orange’s parent company France Telecom, said he was delighted by the regulators' decision: “This clearance will allow us to create a strong operator and to offer high-quality network and services to our customers," said Pellissier. "By drawing on the resources of Deutsche Telekom and France Telecom, and on an experienced management and staff in the United Kingdom, we are confident that we will leverage on identified synergies and generate significant value for our shareholders.”

For the first 18 months, at least, Orange and T-Mobile have pledged to allow the two companies two co-exist. This merger is expected to save the companies around £3.5 billion. In terms of management Orange UK’s chief executive Tom Alexander will take the lead, assisted by current T-Mobile chief executive Richard Moat who will work as the company’s chief operating officer.

As part of the agreement the joint entity has been requested to sell a quarter of their combined spectrum in the 1800MHz band, freeing up one of three frequency bands used for mobile communications in the UK. Speaking on this decision, Ronan Dunne, chief executive of Telefónica UK Ltd said he was pleased the European Commission had taken steps to “address the significant competition arising from the concentration of 1800MHz spectrum”, although he also commented O2 were keen to find out the precise details of how the spectrum remedy would operate in practice: “It’s crucial to get this right,” said Dunne. “The spectrum needs to be made available to the market in a way that promotes competition for next generation super fast mobile broadband.”

Meanwhile, Kevin Russell, chief executive of 3 UK said it was urgent for key competition and consumers issues to be addressed if the proposals put forward by Digital Britain were “serious about the UK being a competitive market with true consumer choice.”

Of course, with every merger comes a wave of redundancies. According to a report by The Times analysts are estimating up to 2,000 jobs may be in jeopardy and high streets could end up with empty units. Orange boss, Tom Alexander said it made sense to reshuffle outlets commenting, “where there are T-Mobile and Orange shops next to each other, it may make more sense to have one bigger store.”

The merger may herald bad news for competitor providers. A combined market share of 37 per cent would end up knocking mobile provider O2 into second place in the UK and Vodafone into third.