Last week's rumors are now a reality. Deutsche Telekom and France Telecom have agreed to merge their UK wireless operations. T-Mobile UK with Orange to create a yet-unnamed venture with a combined customer base of 28.4 million, or 37 per cent of the UK wireless market.
The deal, which is a 50-50 merger, will make the unnamed firm the largest UK carrier. Competitor 02 has 27 per cent share of the market and Vodafone has 25 per cent. Hutchison Whampoa's 3 has 8 per cent of the market. Orange CEO Tom Alexander will be CEO of the new company and T-Mobile UK CEO Richard Moat will be COO.
The two firms say the merger will cost between $655 million and $983 million but will create synergies that could equate to savings of more than $5.7 billion. The deal is expected to close sometime in October, depending upon approvals from regulators.
Matt Hatton, principal analyst with Analysis Mason, said the merger will likely face a number of regulatory hurdles before it is finalized and regulators may attach some stringent requirements to the merger--such as making the operators agree to help provide rural broadband coverage.
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