Orange and T-Mobile in the UK are set to merge, creating the country's largest mobile network.
As we reported yesterday, the parent companies Deutsche Telekom and France Telecom were tipped to be in talks, and have now entered a period of exclusive negotiations, with a deal expected to be complete by the end of October.
The new plan will see between £600 million and £800 million pumped into the joint venture between 2010 and 2014 for transitional costs, but it's expected the new 50:50 partnership will realise savings on capital expenditure for the two networks of £620 million, with £100 million a year thereafter.
The merger will create the UK's largest mobile network, with a 37 per cent subscriber base, dwarfing O2's 27 per cent, Vodafone's 25 per cent, and making 3's share of eight per cent look very small indeed.
Big value
The new partnership will be worth around £3.5 billion, with both parent companies contributing their UK networks to the deal. Deutsche Telekom will give T-Mobile debt free, whereas Orange will come with £1.25 billion of debt, in order to equalise the value of the networks for the deal.
For the consumer, this likely means not only more competitive pricing as the new network will be able to compete heavily with O2 and Vodafone, but a much improved broadband offering, with Orange's well-established fixed line offering and T-Mobile a market leader in the mobile version.
It is anticipated 90 per cent of the free cash flow will be split between the two shareholders, and Deutsche Telekom can now write down less of the value of T-Mobile UK after getting more from the network than if it was just sold.
Your comments (5) Click to add a new comment
nitrofan
September 9th 2009
5. T-Mobile are the best provider I have ever been with, they offer the best value for money packages and GREAT customer service.
However I concerned that a merger with Orange will lead to "misleading" charges I left Vodafone because of, and the appalling customer service I got from o2!(The UK's worst ever operator)
worst of all this is bad news for the customer, less competition leads to cartel pricing, they cant help themselves and the govt just stands by and lets them rob us blind! Has anyone checked recently how much "Unlimited" mobile broadband their "Allowance" actually gives them! apparently "unlimited" means something very different to network providers than the rest of the English speaking world
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azune
September 8th 2009
4. +1 for OraBile!!! Two shi**y companies merge. Been with O2 for years, very happy with all round service, I believe that's one of the reasons they ARE the leading mobile company in the UK!
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hu_the_fox_hat
September 8th 2009
3. if only they would call the new company "OraBile" lol
the petition starts here!
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lovlid
September 8th 2009
2. Having suffered at the hands of orange's customer service tw@ts, I have to agree with asciismoke.
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asciismoke
September 8th 2009
1. Having been a customer of both companies in the past and have suffered with their pathetic coverage I think the newly merged company should be named 'OraBile'.
Which I reckon sounds suitably unpleasant for the mixing of two things I never want to come into contact with again.
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