Feeds

T-Orange: How it's going to work

Telcos to slash and burn ahead of 2012 hook-up?

Providing a secure and efficient Helpdesk

The T-Mobile and Orange brands will survive for at least the next two years in the UK as the telcos combine their operations here - though their employees might not.

The merged operation of Orange and T-Mobile is expected to save €445m in operational expenditure annually, a saving that will come from shutting shops, dismantling masts and closing duplicated departments. But that's going to take a couple of years and it won't be until that process is completed that we'll find out what the new venture's going to be called.

Today's announcement is just that: nothing has been signed as yet, as the companies are now commencing a due-diligence process to make sure there aren't any debts hiding behind the sofa. This also gives them a couple of months to put the paperwork together. The idea is to have a signed agreement in place by the end of October, and then let the EU (and Ofcom) have a think about the competition issues.

No one has ever done this before, so the process for approval isn't clear, but the UK is a very competitive market with lots of other operators. So Orange and T-Mobile reckon regulatory approval will come in about six months, at which point the deal is completed and the company starts realising those synergies they keep talking about.

That starts with Orange chucking in £1.25bn to make up the difference in value between the two companies. Deutsche Telekom then loans £625m to the new venture which it then repays to Orange: that leaves the new company owing £625m to each of its parents, and equally owned by them both.

Combining the operations is expected to take about 18 months, and the two brands will continue to exist for that period (perhaps with a footer on the logos to indicate shared ownership). Meanwhile, duplicated departments will be shut down, 120 shops will close, call centres will be consolidated and the physical networks will merge into a single infrastructure supporting both 2G and 3G technologies.

Right now T-Mobile has around 10,000 2G base stations, while Orange runs about 13,000; both companies operate around 7,000 3G base stations. T-Mobile has already started upgrading all its 2G bases to support 3G and that will be the strategy for the new venture, which eventually plans to have between 14,000 and 16,000 bases in operation.

Obviously that represents quite a saving, though the new venture reckons only a third of the savings will come from reduced cost of infrastructure: the other two-thirds will be saved by reductions in sales and marketing and closing down the duplicated departments.

Virgin Mobile, who could have walked away from its MVNO arrangement with T-Mobile thanks to the "change of ownership" clause in its contract, are apparently all in favour of the deal. Equally unaffected will be 3, who already has a network-sharing deal in progress with T-Mobile. During the press conference this morning 3 was variously described as "highly supportive", "strongly supportive" and "hugely supportive", so we gather that the operator is in favour of the deal.

So some time around the beginning of 2012, having made all the savings and laid off the excess staff, it will just remain for the new venture to sit down and decide what it's going to call itself. Suggestions on a postcard please. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Same old iPad? NO. The new 'soft SIMs' are BIG NEWS
AppleSIM 'ware to allow quick switch of carriers
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Brits: Google, can you scrape 60k pages from web, pleeease
Hey, c'mon Choc Factory, it's our 'right to be forgotten'
Of COURSE Stephen Elop's to blame for Nokia woes, says author
'Google did have some unique propositions for Nokia'
It's even GRIMMER up North after MEGA SKY BROADBAND OUTAGE
By 'eck! Eccles cake production thrown into jeopardy
Mobile coverage on trains really is pants
You thought it was just *insert your provider here*, but now we have numbers
Don't mess with Texas ('cos it's getting Google Fiber and you're not)
A bit late, but company says 1Gbps Austin network almost ready to compete with AT&T
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.