European Commission Clears Orange-T-Mobile Merger

The European Commission announced on Monday the approval of the proposed merger of Orange UK and T-Mobile UK, the UK subsidiaries of France Télécom's (FT) and Deutsche Telekom's (DT). The EC also revealed that the decision has been taken upon the recently proposed give up of spectrum in the 1800 MHz band, as well as on the continuation of the existing network sharing agreement between T-Mobile and Hutchison 3G UK (3UK).

The two carriers unveiled recently that they agreed to offer 25 percent spectrum in the 1800 MHz band so that the merger could be approved, and also stated that the network sharing agreement with 3 UK would remain in place even after the forming of the joint venture. The 1800 MHz band is one of the three frequency bands that are used in the communications area in the UK at the moment, and there was concern that the joint-venture would have monopoly on the band.

Based on the fact that Orange and T-Mobile reported they would give spectrum to rival carriers, the UK Office of Fair Trading (OFT) stated that it did not plan on pursuing the merger any more, and the European Commission approved the merger. “I am happy that we managed to resolve the competition issues in this case quickly in close cooperation with the Member State concerned,” said European Competition Commissioner Joaquín Almunia.

Orange UK, as most of you might already know, is a wholly-owned subsidiary of the French incumbent telecommunications operator France Telecom, while T-Mobile UK is wholly-owned subsidiary of the German incumbent telecommunications operator Deutsche Telekom. According to the European Commission, there are no direct concerns regarding the competition in the UK market of telecommunications services, but only due to the aforementioned conditions.

As soon as the two carriers will merge their operations, the newly formed joint-venture will account for the largest market share in the UK, namely 37 percent, while also enjoying a combined user base of 28.4 million customers. The current leading telecoms services provider in the UK is O2, which enjoys a market share of around 22 percent. For the time being, there are no details available on the name the new entity will choose.