T-Mobile and Orange merger gets European OK

The European Commission has approved the merger, which will create the UK's largest operator, after the parties allayed fears over spectrum and competition

The European Commission has given its approval to the merger of T-Mobile and Orange's UK subsidiaries, which will create the largest mobile operator in the country.

On Monday, the Commission said its approval for the deal was conditional on the amendment of T-Mobile's network-sharing deal with 3 "to ensure that there remain sufficient competitors in the market", and on T-Mobile and Orange giving up a quarter of their combined 60Hz of spectrum in the 1800MHz band.

"I am happy that we managed to resolve the competition issues in this case quickly, in close cooperation with the Member State concerned," competition commissioner Joaquín Almunia said in a statement.

The joint venture will begin in April, Orange UK chief Tom Alexander said in a conference call on Monday afternoon, with a "market launch" taking place later in the year. In the same call, T-Mobile UK chief Richard Moat said the two existing brands would continue to used "for at least 18 months", but he failed to specify what would happen after that.

The Commission also noted in its Monday statement that the Office of Fair Trading (OFT) had withdrawn its request to refer the case for review by UK competition authorities, in the light of the operators' spectrum and network-sharing pledges.

The OFT had expressed fears that the quantity of T-Mobile and Orange's 1800MHz spectrum could have made their combined operation the only operator in the UK capable of offering full-speed 4G services. The 1800MHz band is currently used for 2G services, but can be 'refarmed' for mobile broadband.

In the conference call, Alexander said the spectrum would be sold off in two tranches, in 2013 and 2015, with the proceeds going to the joint venture.

The UK competition regulator had also said it was concerned that "any weakening/elimination of [operator 3] would effectively result in a reduction of vertically integrated competitors from five to three, and cause significant detriment to competition in mobile retail telephony".

In the call, T-Mobile spokesman Robin O'Kelly said T-Mobile's deal with 3 had been "reinforced", but refused to explain the changes to the deal as they were "commercially confidential".

The Commission has not yet released its detailed analysis of the merger — a fact which led the Communications Consumer Panel to say on Monday that it was still "not possible to say whether the merger will be good for UK consumers".

"UK consumers have up to now benefited from the choice, innovation and low prices that result from a competitive mobile market and we want to see this continue," panel chair Anna Bradley said in a statement.

"There may be advantages to clearing the merger at this early stage, but it also carries risks for consumers. If the decision-making process had involved a more detailed and open investigation, this would have allowed greater scrutiny of the merger's impact and given consumers more confidence in the outcome. It is now incumbent on T-Mobile and Orange to proceed with the merger with minimum disruption and confusion for their customers."


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