FT and DT file for UK mobile operations merger approval with EU

13 Jan 2010

France Telecom (FT) and Deutsche Telekom (DT) have called on the European Union (EU) to approve the proposed merger between their two respective UK mobile network operators, Orange UK and T-Mobile UK, Reuters reports. While the two parent companies could have requested that the UK’s Office of Fair Trading (OFT) study the deal, it is believed that the decision to press for an EU investigation stems from the fact that both FT and DT believe the European executive will be more lenient in its handling of the matter. Meanwhile, the Financial Times notes that the OFT is considering whether it will to press to study the proposed tie-up, with the regulator noting: ‘The OFT is currently considering whether to make a request to the EC for the proposed joint venture to be referred to the OFT for review.’ British consumer groups have pressed for a UK investigation of the proposals, citing concerns over the impact on competition in the British wireless sector that the Orange-T-Mobile tie-up could have.

While the OFT can indicate its desire to consider the matter, ultimately the decision on whether London or Brussels will review it remains with the EU. Having confirmed it has been advised about the merger proposals, the European Competition Commission is now due to issue an initial ruling by 15 February as per standard merger approval timetables. By that date the European body will decide whether to simply approve the tie-up or call for an in-depth investigation, which would take up to 90 days.

Orange and T-Mobile announced in November that they would form a 50-50 joint venture which is expected to take over as the UK’s largest mobile operator by subscribers. Currently the two cellcos lie in third and fourth place in the UK, behind market leader O2 UK and Vodafone UK. Should the merger be approved the combined entity would have approximately 32 million subscribers, according to TeleGeography’s GlobalComms Database, giving it around 40% of the market. Both FT and DT have, however, insisted that they will not make concessions to competition authorities in order to secure merger approval, despite calls from O2 and the sectors smallest operator, 3UK, for the joint venture to relinquish spectrum in the 1800MHz band should the merger be given the go-ahead.

United Kingdom, Deutsche Telekom (DT), EE, O2 UK, Orange Group, T-Mobile UK