It has now been around three weeks since we announced our proposed plans to merge with Orange UK. There has been a lot of talk in the UK mobile industry about consolidation, and pressure has been growing on the whole sector as margins and revenue have declined. Two years ago, we decided to consolidate our 3G network through a network sharing agreement with 3 UK, with clear benefits to both the bottom line as well as our customers, and the arrangement was the first of its kind. The deal with Orange will take consolidation much further, with extensive synergies across the business affording even greater customer benefits.
When I joined T-Mobile in July, I started to map out a turnaround strategy that would move us from fourth to third place. I was under no illusion that this was going to be tough to deliver, but we came up with a strong game plan. The pillars of the strategy are to offer the best value to the customer, continuing to invest heavily in both 2G and 3G, while taking costs out of the business and enabling continued growth. A big part of this plan was to strip out complexity for the customer by simplifying our tariff portfolio and product range. We also had a clear vision of becoming the lowest cost network, in terms of operating expenditure, thus giving us the headroom to invest in new services and customer acquisition.
In early September, events moved along swiftly – culminating in the announcement by Deutsche Telekom and France Telecom of the proposed 50:50 joint venture. While we work to reach a final agreement, we’re still very focused on our turnaround strategy. There is a long road to getting the deal approved, and it’s absolutely crucial we maintain our momentum during this period, and indeed beyond.
Clearly, our plans to join forces with Orange will help realise some of our ambitions quicker than if we remained a standalone operation. We’ll definitely have the best 2G and 3G networks in the UK, and our combined retail presence on the high street will make it easier for customers to access to our products and services. And we’ll also share best practice in customer service.
Mobile telecoms is a scale business. By joining forces with Orange, we’ll have the scale to invest in customer growth and to bring new services to market. It will give us the leverage to negotiate the keenest deals with suppliers, which will translate into better value for the consumer.
This is a potentially momentous event in UK mobile telecoms and would enable us to create a new leading force in the market, with more than 28 million customers and 37% market share. The link up will create added financial value for the two sets of shareholders, and above all, better value for customers, who will ultimately determine whether this deal succeeds or fails. We will be able to provide them with the best 2G/3G network in the UK, the best high street access to our products and services, and world class customer service through best practice sharing between the two companies – ultimately, the best customer experience in the UK market.
It’s an exciting time for everyone at T-Mobile. Walking around our offices, I sense that our employees are energised about the future and glad to see the back of months of press speculation. For now, we are working hard to complete the due diligence required to reach a definitive agreement. More importantly though, we are keeping a sharp focus on what we need to do in the short term to keep T-Mobile on a trajectory of revenue growth and improved customer satisfaction.