In a move which signals a massive consolidation in the telecom sector in Europe, the proposed merger between Deutsche Telekom’s T-Mobile and France Telecom’s Orange has come through after their merger was approved by various competition authorities in Europe and UK.
The merger holds critical significance for the telecom sector in UK as it will lead to the formation of the largest mobile network in the country with over 30 million users and a market share of around 37 percent.
Expressing satisfaction at the way the negotiations were done, Timotheus Höttges, the CFO of Deutsche Telekom mentioned "The negotiations were conducted in a fair way and I am certain that this spirit of professionalism and partnership will shape the future of our joint venture. It will set new standards as number one in UK mobile market."
While the performance of T-Mobile in UK of late has been very good, Orange in contrast has been faring well below market expectations, with its fixed broadband customer base dwindling to below the 1 million mark.
In this backdrop, most analysts believe that the merger will allow the companies to better leverage their synergies and develop competitive synergies in high growth sectors such as mobile broadband and roll out innovative services.
One can expect significant cost cutting to take place, especially in the backend. T-Mobile and Orange will certainly be a force to reckon against Spanish Telefonica and O2 and UK based Vodafone. The focus will now be on the smaller mobile phone networks.