DT and FT offer concessions to spur approval of UK merger plan

18 Feb 2010

With a view to improving the chances of gaining regulatory approval for the merger of British mobile operator T-Mobile UK and Orange UK, the cellco’s respective owners, Germany’s Deutsche Telekom (DT) and France Telecom (FT) have reportedly offered to make a number of concessions to allay possible concerns over the tie-up. According to Dow Jones Newswires, citing a person familiar with the situation, the two operators may offer to sell off radio spectrum and make other, undisclosed concessions, in the hope of prompting the European Commission (EC) to okay the merger, rather than see the matter referred to the UK’s Office of Fair Trading (OFT).

It is understood that the EC has called for feedback from other UK mobile operators as to how the mooted compromises might reduce their concerns over the T-Mobile/Orange merger, while British fixed line incumbent BT is also believed to have received a questionnaire from the commission concerning the matter. Responses are reportedly due by the end of this week.

In September 2009 it was announced that DT and FT had started exclusive negotiations aimed at merging their respective British mobile operations in a new company in which each will hold 50%. Should the merger be approved, upon completion the newly formed operator will overtake current market leader O2 UK, itself a subsidiary of Spain’s Telefonica, and would have a combined customer base of approximately 32.72 million based on figures held by TeleGeography’s GlobalComms database for the end of September 2009, giving it around 40% of the market. The operators claim that the combined entity will be better placed to invest in new services and to exploit new technologies, and will be better equipped to compete with the country’s two other major cellcos, O2 UK and Vodafone UK.

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