Orange & T-Mobile To Merge In The UK
"Two of the largest UK mobile phone network operators plan to merge."
This was a move that nobody saw coming. France Telecom and Deutsche Telekom are in talks of merging their UK operations - Orange and T-Mobile. The merger would form the UK's biggest mobile phone operator with over 28 million customers.
The venture doesn't have a name yet, but as the third and fourth largest operators in the UK the two companies have clearly decided they had to do something to take on O2 and Vodafone in the UK market. They promise "substantial benefits to UK customers" and expanded network coverage, better network quality and improved customer services
Timotheus Höttges, CFO of Deutsche Telekom, said: "We will become market leader - our customers will benefit in many ways, for example from the best mobile broadband offer in Britain. In the second-biggest market in Europe, which is undoubtedly one of the toughest and most competitive, we are giving T-Mobile UK a clear and strong future. And, with our partnership, we have taken the most value enhancing strategy for Deutsche Telekom and its shareholders."
Gervais Pellissier, CFO of France Telecom added: "By combining our operations in the UK, we anticipate the long-awaited consolidation in one of Europe's most competitive markets, thereby creating a well positioned player. Our shareholders will benefit from higher profitability and an immediate cash flow per share accretion without impacting the overall indebtedness of the parent companies."
The deal is expected to be completed by the beginning of November, although the two brands will continue to exist separately for 18 months after the completion. It would not be surprising if this triggered potential mergers of other smaller providers or even job cuts within the companies.
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