T-Mobile and Orange begin UK merger process

Deutsche Telekom (T-Mobile) and France Telecom (Orange) have formally signed an agreement to merge their UK mobile operations, reports Dow Jones Newswires. The development marks the start of a merger process that aims to create the UK's largest mobile operator. T-Mobile UK's managing director Richard Moat said that the deal was scheduled to be signed yesterday, and would lead to the two firm's moving on to discuss the networks, IT systems and the shape of the organisation. However, Moat warned that any changes would not be able to be implemented until the joint venture secures regulatory approval. "We hope that we can close the deal and implement the joint venture by the middle of next year," Moat said.
Announced in September, the Orange UK/T-Mobile UK merger will create a mobile operator with 28.4 million customers (based on current Wireless Intelligence data), giving it an approximate 37 percent market share, pushing current market-leader Telefonica O2 into second place (on 28 percent) and Vodafone into third (23 percent). The merged business will have pro forma 2008 revenues of approximately EUR9.4 billion (£7.7 billion) and EBITDA of EUR2.1 billion (£1.7 billion). The operators said the merger will create net opex and capex savings in excess of £3.5 billion in total. Integration is expected to take 18 months following approval of the deal by the authorities and will cost around £600 million to £800 million. Both operators' brands will be maintained for this period with a new brand strategy scheduled to be introduced in the first half of 2012.