Conditions accepted
The Orange T-Mobile 50/50 deal as discussed previously has been accepted by the European Commission, and the UK Office of Fair Trading has withdrawn its objections, Reuters report.
France Telecom and Deutsche Telekom can proceed with merging their UK operations, on condition of expanding the existing network sharing agreement T-Mobile has with 3. The combined company must also hand back a quarter of its assigned 1800 MHz radio spectrum. The paper should be signed in the Spring, followed by both brands running in parallel for up to 18 months.
FT and DT’s new business will be catapulted to a 37% market share, with the companies expecting to save around €4 billion through synergies and economies of scale, i.e. cuts.
Mobile mast triple play
In a move designed to appease regulators at the European Commission and to get their UK merger accepted by the end of March, parent companies France Telecom (Orange) and Deutsche Telekom (T-Mobile) have proposed that their combined UK operation would continue with, and extend an existing network share between T-Mobile and 3.
Currently the existing deal between T-Mobile and 3, managed by their 50/50 subsidiary Mobile Broadband Networks Limited will peak in October at 13,000 3G masts. Under the new proposal the deal would continue on to have access to 3000 more, becoming the largest 3G network in the country with 16,000.
Earlier in February, the UK Office of Fair Trading asked for the merger to be formally referred back to itself to investigate competition concerns, a decision applauded by consumer groups. To further sweeten the EU Commissioners and stop the extra months of discussion such a referral would entail, FT and DT bosses have changed their position on keeping all of the 1800MHz spectrum they are currently licensed to operate, now agreeing that up to 25% might be handed back. Vodafone and O2 (and 3) had suggested up to 50% of the spectrum should be handed back. Any of these competitors might still launch a challenge.
When completed the Orange T-Mobile partnership will form the largest UK mobile operator, with more than 28 million customers. Around 37% of the market.
Sell, sell, sell
The Wall Street Journal has reported that Deutsche Telekom may be under further investor pressure to shift, or reorganise part of its T-Mobile business. Citing mysterious ‘people familiar with the matter’, the Journal concluded that the most likely eventual outcome is the selling off of a 20% stake in T-Mobile USA as an initial public offering (IPO), meaning a flotation on the stock exchange.
Very similarly, a 4th place market position and grumbling noises about making more money from shareholders including the German government and US private equity group, Blackstone, eventually led to the current merger proposal of T-Mobile UK joining with France Telecom’s Orange UK holding. But not before a year of speculation that T-Mobile UK would buddy with Vodafone, O2, 3 or the Milk Marketing Board.
Now we can all contemplate similar US market consolidation, and a T-Mobile USA marriage of convenience to a competitor.
The Orange T-Mobile 50/50 deal as discussed previously has been accepted by the European Commission, and the UK Office of Fair Trading has withdrawn its objections, Reuters report.
