Merger of Orange and T-Mobile to result in the biggest mobile phone company in the UK
Orange and T-Mobile are merging to become the biggest mobile phone operator in the country, with over 28.4 million customers (37% of the market), thereby going over rivals Vodafone and O2.
However, the deal will result in significant lay – offs among the total 19,000 workers as the 2 companies will reduce the number of towers, close high street retail stores and cut down on call center staff in an aim to save nearly 3.5 billion pounds.
The number of mobile phone masts will reduce by at least 5,000.
By 2012, the venture will come under one name with either T-Mobile or Orange resigned to the waste bin. A decision hasn’t been reached on the brand to be dumped until the merger is approved by authorities, which will, most probably, take a number of months. This merger will also result in nearly a million residential broadband customers.
The CFO of France Telecom, owner of Orange, Gervais Pellissier, said that the deal would change both companies’ position in the country and benefit customers in the UK. The CFO of Deutsche Telekom (owner of T-Mobile), Timotheus Hottges, said that this meger was a step in the direction of bringing about a new mobile champion in the country.
However, analysts are reluctant with regard to the structure of the deal, whereby both companies have a 50% share, and get the feeling that tough decisions might be hard to make. Both companies have committed to the agreement for a minimum of 3 years.
This merger solves Deutsche Telekom’s problems in the UK where T-Mobile is 4th in market share and has not performed to its potential. It also enables Orange to up their margins by sharing their wireless network items with T-Mobile.
T-Mobile is currently sharing their 3G network with 3, the 5th biggest mobile operator in the country and this deal will also be part of the JV. Orange already provides coverage for 3’s 2G services. However, a deal is yet to be sealed with Hutchison Whampoa, the owner of 3.
Source - Guardian
