9/16/2009 10:55:00 AM
What impact will the Orange/T-Mobile merger have?
How does the joint venture fit with existing network share agreements?
The complication lies within T-Mobile’s network share partnership with 3, called MBNL (Mobile Broadband Network Limited), which was formed around two years ago. Orange currently has a limited share deal with 3 on 2G, but has now secured itself a stake in MBNL because the merged company will take on T-Mobile’s 50% ownership of the MBNL deal.
Orange will bring another 7,000 3G masts into the MBNL equation. 3 looks set to benefit strongly from Orange and T-Mobile’s joint venture, effectively piggybacking off Orange and T-Mobile’s new ‘super network’.
What will happen to Orange and T-Mobile’s 2G masts?
The joint venture involves removing around 8,000 2G base stations. This will significantly contribute to the £3.5bn that Orange and T-Mobile expect to save overall from the merger. The pair have a combined total of 23,000 2G base stations – 13,000 belong to Orange, while T-Mobile has the other 10,000. The joint venture plans for the total number to be reduced to 14,000-16,000. The environment will be the other big winner from the reduced number of masts.
… and what about 3G masts?
The merged company will keep the total number of 3G masts around the same as it is now. MBNL is in the process of rolling out new 3G masts, which will enable the merged company to shut some existing ones down.
T-Mobile and Orange currently have an equal number of 3G base stations – around 7,000 each – and the aim is to have around 14,000-16,000 3G masts, the same as the number of 2G base stations.
What implications will the joint venture have with regards to spectrum?
The next spectrum auction is happening in 2010, when the 2.6GHz and ‘Digital Dividend’ (from switching off analogue TV) will be up for grabs. The question now is whether T-Mobile and Orange will bid separately or as a joint operation. This will rest on how quickly the merger goes through, which will depend on if, and how much, the competition authorities hold up proceedings.