Deutsche Telekom and France Telecom expect to complete the merger of their UK subsidiaries T-Mobile and Orange during the Spring.
The operators received clearance from the European Commission yesterday, on the condition that they divest some of their…
Deutsche Telekom and France Telecom expect to complete the merger of their UK subsidiaries T-Mobile and Orange during the Spring.
The operators received clearance from the European Commission yesterday, on the condition that they divest some of their combined 1800Mhz spectrum and amend an existing network sharing deal between T-Mobile and 3, to ensure that the UK’s smallest operator is not isolated.
While the decision has been widely welcomed, various consumer groups have responded negatively to the move.
Philip Cullum, Deputy Chief Executive of statutory organisation Consumer Focus said: “We have serious reservations about the way this approval process has taken place. The potentially far-reaching implications of this deal for UK consumers should have been examined by UK regulators, as we have called for, not behind closed doors in Brussels.
This decision means that we still have a number of unanswered questions around the impact of the merger on competition. There remains a worrying lack of clarity around the deal struck by Orange and T-Mobile, particularly concerning the specific concessions that the two companies have made, as well as worries about the broader effects of cutting the number of UK mobile networks from five to four.”
T-Mobile and Orange have insisted that the deal will in fact benefit consumers as they aim to lead the way in investing in mobile broadband and new technologies.
Of the European Commission’s decision, which means the Office of Fair Trading (OFT) will not investigate the deal, Tim Höttges, CFO of Deutsche Telekom, said: “This is excellent news, for our customers, for our highly committed teams in the UK and for our shareholders. Now the way is clear for pooling our resources to create an outstanding high-speed mobile broadband network in one of the most competitive markets in Europe. This joint venture company is based on a significant potential of synergies which create substantial value for the two shareholders and translate directly into customer benefits. Our teams in the UK will be rolling up their sleeves to roll out these benefits.”
The new joint venture company is expected to generate estimated synergies with a net present value in excess of E4bn (£3.5 billion).
The new business will have pro forma 2009 revenues of approximately E8.5bn (£7.57bn) and EBITDA of E1.55bn (£1.38bn).
France Telecom was advised by Perella Weinberg and Bank of America Merrill Lynch.
Deutsche Telekom was advised by JPMorgan.
