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T-Mobile UK and Orange to merge | T-Mobile UK and Orange to merge |
(21 minutes later) | |
T-Mobile UK and Orange are to merge - becoming the UK's biggest mobile phone firm with 28.4 million customers. | T-Mobile UK and Orange are to merge - becoming the UK's biggest mobile phone firm with 28.4 million customers. |
The deal between Orange-owner France Telecom and Deutsche Telekom's T-Mobile UK will create a business with sales of 9.4bn euros (£8.2bn; $13.5bn). | |
The merged firm will have about 37% of the UK mobile market - overtaking the current leader, Telefonica's O2. | The merged firm will have about 37% of the UK mobile market - overtaking the current leader, Telefonica's O2. |
It is the second large corporate deal in two days, after Kraft Food's £10.2bn takeover proposal for Cadbury. | It is the second large corporate deal in two days, after Kraft Food's £10.2bn takeover proposal for Cadbury. |
'Efficiencies' | |
Orange and T-Mobile said their deal - due to be signed by November - would "bring substantial benefits to UK customers", and promised expanded network coverage, better network quality and improved customer services. | |
Both brands will remain separate for the first 18 months after the deal is completed while branding is reviewed. | |
Orange chief executive Tom Alexander will lead the new company, with T-Mobile's UK boss Richard Moat as chief operating officer. | |
Orange employs 12,500 people in the UK, while T-Mobile has UK workforce of 6,500. | |
A spokeswoman confirmed there would be "efficiencies" that could be made across both businesses - but said it was too early to give details of any impact on staff. | |
DEAL IN NUMBERS 28.4m customers37% UK market share£8.2bn sales (in 2008) Source: Deutsche Telekom Return of the deal? | |
Integrating the business will cost between £600m and £800m, the firms said. This bill would include decommissioning mobile phone masts, cutting back the network of stores and streamlining other operations. Savings should reach about £445m a year by 2014, they added. | |
Avoiding writedowns | |
Deutsche Telekom said earlier this year that it was considering its options for its UK business - which has struggled to win customers in the highly competitive market - which sees five operators and several smaller players compete. | Deutsche Telekom said earlier this year that it was considering its options for its UK business - which has struggled to win customers in the highly competitive market - which sees five operators and several smaller players compete. |
Observers say that a joint venture allows the German firm to avoid the write downs it could face if forced to sell T-Mobile UK for less than it hoped. | Observers say that a joint venture allows the German firm to avoid the write downs it could face if forced to sell T-Mobile UK for less than it hoped. |
Meanwhile, for France Telecom, the deal it is a way to strengthen its position in the UK market without paying cash or taking on vastly more debt. | Meanwhile, for France Telecom, the deal it is a way to strengthen its position in the UK market without paying cash or taking on vastly more debt. |
T-Mobile is currently the fourth-largest mobile operator in the UK, with a 15% share of the market. O2 has a 27% share, followed by Vodafone (25%) and Orange (22%). |