T-Mobile picks Orange for merger
They come over here, run our mobile networks...
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T-Mobile and Orange are merging their UK operations to create the largest operator in the UK, with ownership split between France Telecom and Deutsche Telekom.
The companies reckon that by merging the networks they can save €4bn running a new operation owned 50:50 by the current parents. That new operation will be the UK's largest network operator: between them T-Mobile and Orange have more than 28 million subscribers, compared with O2's 20 million or so. But to get the savings they'll have to spend between £600m and £800m integrating their businesses.
Speculation about who would buy T-Mobile UK has been rampant, but a merger avoids Deutsche Telekom having to sell at a lower price than it wanted, and expands France Telecom's UK operation without spending any cash upfront.
The biggest savings will come from dismantling redundant network infrastructure, as Orange and T-Mobile have heavily overlapping networks. The deal is expected to complete in November, subject to regulatory scrutiny. The UK will then be down to four network operators: T-Orange, Vodafone, 3 and O2. This is probably a sensible number for a country of this size.
Shops, back office and IT operations will also be cut back. The firm hopes to improve margins by making more sales through its own network of stores and to cut customer service and marketing spending.
The new company will be run by Orange's chief executive Tom Alexander, with Richard Moat from T-Mobile becoming chief operating officer. There is a statement here, and we'll have more details from the conference call shortly. ®
COMMENTS
@Tim J
"The Monopolies and Mergers Commission is called the Competition Commission these days."
"Anyone yelping about the lack of regulatory oversight at this point in time is entirely missing the point."
Words upon words, when the average citizen is looking for reassurance, in a political climate where takeovers and mergers are increasingly perceived - rightly or wrongly - as a source of concern.
The only thing I - or any of us - are "missing" is an immediate and clear public statement of the state of play from whatever the Competition Commission calls itself these days. Not unreasonable and not rocket science.
Be in no doubt? I doubt everything from govt these days other than the glint of silver in their palms...
re: Where the HELL is our so-called Monopolies Commission???
Doing what it does best by encouraging them?
Quite hard to put a good spin on this
I used Orange->Virgin (T-Mobile) and just moved to 3. In cities the coverage seems the same, but in rural areas I get good Orange/3/O2 and no T-Mobile.
I remember Orange's customer service being pretty awful, and they sent us several faulty phones which we spend a lot of time messing around with sending them back again, which eventually prompted me to move to Virgin Mobile.
I think Virgin have great customer service, poor network (T Mobile's network is sooo shit!) but they've pretty much lost their differentiation now their plans are so complicated. And I really hate Virgin Media, who signed us up under a special offer they then claimed didn't exist costing us an extremely large sum of money (maybe around £150?).
The biggest shocker for me was 3: really good customer service, great value pay-as-you-go and indispensable free Skype coupled with very good network coverage. Amazing.
If anyone's looking for a new network, I highly recommending having a look at Three!
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