Broadband News

The UK's third and fourth biggest mobile phone companies are merging, creating a British telco juggernaut that would become the country's biggest network. While the Orange and the T-Mobile brands will survive as separate entities until at least 2012 under the terms of the deal, the aim is for £445 million per year to be cut from their combined expenditure by 2014. Meanwhile, the move is another setback for the slow-moving negotiations on the role mobile broadband with play in Digital Britain.

"T-Orange" will have over 28 million customers on its books or, in other words, thirty-seven per cent of the UK mobile market: a bigger share than former top dogs O2 or Vodafone can muster. Those aren't the only significant figures involved in the merger: the new venture will need five thousand fewer phone masts than the composite companies required alone. While the number of job losses that'll result is currently unknown it's expected to be significant, with the firms currently employing over 18 thousand people in Britain.

T-Mobile UK - which is part of Deutsche Telekom - and Orange are choosing to emphasize the potential benefits their marriage could bring their customers rather than how many people will be made redundant. “We will become market leader - our customers will benefit in many ways, for example from the best mobile broadband offer in Britain," says Deutsche Telekom's chief financial officer, Timotheus Höttges. "In the second-biggest market in Europe, which is undoubtedly one of the toughest and most competitive, we are giving T-Mobile UK a clear and strong future."

Where all there were five major players in mobile market, henceforth there are effectively four - and that changes the lay of the land when it comes to Digital Britain. When it comes to reaching the Government's self-assigned universal service commitment, it's not been possible to date to reach an agreement on how mobile broadband fits in. The reason for that is that negotiations between the five key firms, which have been rolling on for months, have came to nought, with no consensus reached on how to redivide the spectrum. Now there's effectively four firms, the amount of that spectrum that "T-Orange" would control under recent proposals would be more than any one network is allowed, thanks to a caps system.

But T-Mobile UK and Orange remain upbeat, even on such a messy sticking point as Digital Britain. "The discussions are still ongoing," Richard Moat, T-Mobile UK's chief executive told The Guardian, "and we both fully support the Digital Britain initiative and we think that the creation of the best 3G network in the UK is going to be a great asset in underpinning and accelerating the government's vision."

Meanwhile, consumer groups are calling for the Office of Fair Trading to step in and investigate the merger; "Creating a new mobile phone giant could mean less genuine choice for consumers," Audrey Gallacher from Consumer Focus told The Guardian. It's feared any operational savings made will bypass customers and end up in the pockets of shareholders.

European regulators still have to give the green light to the tie-up - and that's expected to take six months. Until that process has been completed - and the scale of the deal is more-or-less without precedent - it's not clear what the new enterprise will ultimately be called. That means commentators are able to take their best guess, with obvious options including "T-Orange" (as it's already being dubbed by several media firms) and the more pun-friendly "Orange-T." Orange-T, anyone? Anyone?