Deutsche Telekom and France Telecom announced today that they plan to merge their T-Mobile and Orange brands in the UK. The new company, a new 50:50 joint venture company, will instantly become the UK’s leading mobile carrier with about 28.4 million customers (about 37 percent of the market).
This combination will bring substantial benefits to UK consumers. It will result in expanded network coverage and enhanced indoor and outdoor network quality for 2G and 3G services, as well as better customer proximity through a larger network of own shops and improved customer services. The combination will place the joint venture in a better position to invest in innovative new services and to exploit new technologies. The new enlarged business will also be able to compete more effectively with the other two large mobile operators in the market.
Don’t expect any changes in the short term. The two bands will continue to be maintained separately for 18 months after completion of the transaction. A new branding strategy is then expected to take over.
The merger will cost the two companies between £600 and £800 million (between about US$660 million and US$1.3 billion) in integration costs between 2010 and 2014 but is also expected to save the new company about £445 million (about US$740 million) a year from 2014 onwards.