Deutsche Telekom and France Telecom have agreed to merge their UK cellular operations - Orange and T-Mobile. The new mobile operator will have around 37 percent of the UK market, unseating the current leader O2 from pole position.
The companies said in a statement that "the new joint venture will create the UK’s leading mobile operator. It will have a combined mobile customer base of around 28.4 million, representing approximately 37 percent of UK mobile subscribers, based on figures at end December 2008. By integrating Orange’s broadband activities, the joint venture will also have the capabilities to offer convergent solutions to its customers in the future. The business will have pro forma 2008 revenues of approximately € 9.4 billion (£7.7 billion) and EBITDA of € 2.1 billion (£1.7 billion)."
According to the BBC. the new joint venture will come into effect in November, but that both brands will continue running independently for 18 months while being integrated. Orange CEO Tom Alexander will be CEO of the new company, with T-Mobile UK CEO Richard Moat as chief operating officer. The companies say that the merger will cost between £400 million and £600 million, with savings of around half a billion pounds per year by 2014 from removing duplicate base stations and retail outlets, as well as other efficiencies.
T-Mobile UK has been in play for a while, with every UK operator being unofficially linked to a sale or merger of late. One of the strongest rumours until now has been a Vodafone purchase, which would have reinstated that company as the UK leader, although it has been impossible to disentangle serious possibilities from gossip intended to shift share prices prior to any deal.