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T-Orange merger approved

EU smiles on deal

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The merger of T-Mobile and Orange will go through, after the UK's Office of Fair Trading withdrew its request for time to investigate the deal.

The OFT wanted to investigate on the basis that the merged entity would own an unfair proportion of radio spectrum, and that once it had merged with Orange T-Mobile would have little incentive to maintain its network sharing agreement with 3UK. Now the companies involved have undertaken to address those issues, prompting the OFT to back out and the EU to approve the merger.

Specifically, T-Orange will be handing over 30MHz of the 120MHz the combined company holds at 1800MHz, and has signed a deal with 3UK which binds the new entity into maintaining the shared network.

The radio spectrum was always going to be a bargaining chip in the deal: assertions from T-Orange that it had no intention of handing over any frequencies were obviously placing those frequencies on the table. Still, giving up only a quarter of its 1800MHz holdings is hardly a crippling concession.

The spectrum is paired (two 15MHz-wide bands will be given up), so should enable someone else to deploy 3G, or LTE, in that band. But the details of how Ofcom will auction off the spectrum if it does so, and what T-Orange will be expecting in the way of restitution, remain to be seen.

The deal with 3UK was hammered out just over a week ago. No details have been made public, but we understand that a network-sharing contract has been signed directly between Orange and 3UK, which would prevent any desertion of T-Mobile's existing network in order to freeze out 3UK.

So T-Orange will be needing a name ("VentureCo", the internally-used name, is even less inspired that "T-Orange"), and the UK market changes from having four evenly-sized operators (and one minnow) to one dominant player with a pair of also-rans... and a minnow. ®

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