Orange and T-Mobile merger

Yesterday, news channels were littered with headlines concerning the possibility of two major mobile network carriers - T-Mobile, and Orange becoming one under plans to merge their two businesses.

T-Mobile is currently the fourth-largest mobile operator in the UK, with a 15% share of the market. O2 has a 27% share, followed by Vodafone (25%) and Orange (22%). Source: BBC News

T-Mobile, currently owned by Deutsche Telekom and Orange, currently owned by France Telecom - would see a firm with sales of 9.4bn euros (£8.2bn; $13.5bn). This would make the proposed company the largest mobile carrier in the UK, stumping O2 with roughly 37% of the mobile market. This will give the company a great deal of sway when it comes to handsets available. Currently, O2 provides the sought after phone of the moment, the iPhone - the new merger could shake up the mobile UK market.

Obviously a leap to gain majority market share, if the merger completes, will create a mobile network giant with 28.4 million customers according to BBC News. Orange and T-Mobile said their deal would "bring substantial benefits to UK customers", and promised expanded network coverage, better network quality and improved customer services.

Despite Orange and T-Mobile's excitement over the deal by November, it is likely that competition authorities in the UK and EU will probe the deal for any irregularity. Orange chief executive Tom Alexander would head the newly merged company, with T-Mobile's UK boss Richard Moat as chief operating officer. According to each of the firms, the merger would cost between £600m and £800m. This bill would include decommissioning mobile phone masts, cutting back the network of stores and streamlining other operations. However, over time, savings should reach about £3.5bn, they added.

There are some downsides to this deal however. The merger will result in only three major players in the UK mobile market. Less players on the field means less choice, this is an issue for the consumer. There is also a likelihood that the range of tariffs provided for the consumer is likely to be scaled back; hopefully they will be able to keep the best of Orange and the best of T-Mobile rather than the worst. According to the BBC, Which? surveys suggest Orange and T-Mobile have worse customer service than their rivals - and meshing company databases together will bring another challenge.

Finally, the BBC has sought the opinion of lawyer Chris Watson, of CMS McKenna. He believes that UK mobile phone operators "would welcome consolidation in the sector." He adds that, "adding firms saw the current levels of competition as "ruinous" because of how low they had to keep prices to win customers." He also said that existing contracts will not change for customers, however - should your contract come due for renewal the consumer may find the price a little higher.

Mixed opinions on the Orange, T-Mobile merger make it difficult to gauge which route it will take - if at all. Personally I am an Orange customer and my contract is up for renewal in about a year. I am going to be a little angry if my charges increase without a tangible improvement of services as a result of the merger.

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