Orange dropped T-Mobile UK takeover to push through merger deal

The 50:50 merger between Orange UK and T-Mobile UK was forced upon the France Telecom subsidiary in a rush to complete a deal ahead of rival bids. According to reports now emerging, Orange UK had wanted to acquire T-Mobile UK outright, but had to settle for a merger of equals to persuade T-Mobile to sign the agreement ahead of offers from Vodafone and O2.

The deal, which came after months of speculation and strong denials from the involved companies, was only concluded after details were leaked that Vodafone and O2 had offered around £3.5 billion to acquire T-Mobile UK.

To snatch the deal, Orange instead agreed to a 50:50 joint venture that would see Deutsche Telekom contributing T-Mobile UK and its 50 per cent share in mobile network joint venture MBNL with 3 UK, while France Telecom Orange would put in Orange UK, including £1.25 billion of intra-group net debt. Talks are still ongoing over the finer points of the agreement, but a conclusion is expected this month.

While Orange has indicated that an eventual takeover is the most desirable option for France Telecom, a 50:50 merger is more likely to receive the go-ahead from the UK telecoms regulator, Ofcom. If the deal is signed, the UK operators have stated that they will retain both brands for 18 months, by which time some of the huge integration effort might have been achieved.

For more on this story:
Total Telecom

Related stories:Orange, T-Mobile merge UK operations
VIDEO: T-Mobile, Orange execs explain why companies are merging UK operations
T-Mobile UK's turn-around strategy - sell iPhones
T-Mobile UK: D Telekom seeks asset swap as against sale