T-Mobile has been in discussion with Orange over a possible merger of the two companies which would see the creation of the largest network provider in the UK. Deutsche Telekom has been looking to find a solution to its problems with T-Mobile, which has been struggling to get a grip on the UK market. Selling the company would have meant huge losses to Deutsche Telekom and the proposed merger will be a much welcomed alternative.
It will also greatly benefit France Telecom, owners of Orange, who wish to steal the crown of market dominance from current market leaders O2, who currently have a 27% share of the UK market. The new T-Mobile-Orange hybrid would have a staggering 37% share of the market which has been raising concerns among the two companies that the deal would attract the attention of the Competition Commission. The deal will also see the number of major UK networks reduced from 5 to 4 although Orange and T-Mobile state that the merger will be good news for customers with increased network coverage and improved call quality.
For the first 18 months after the merger both brands will remain in use while the new company undergoes a process of rebranding. Analysts are speculating that this rebranding will merely involve scrapping one brand in favour of the other, and with Orange being the stronger brand in the UK it could very well be T-Mobile that is done away with.
The UK market is considered to be the toughest in Europe for mobile phone operators and both Orange and T-Mobile have been struggling to compete effectively against O2 and Vodafone. This deal will see the O2 behemoth relegated to number 2, and an announcement will be made later today on whether a deal has been agreed on the proposed merger.
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