As tipped yesterday by Mobile, Orange and T-Mobile have announced plans to merge, creating by far the biggest operator in the UK.
At a stroke it robs O2 of its market leadership in the UK and leaves Vodafone trailing even further behind.
Ben Wood of CCS Insight told Mobile:‘It is a blow to O2 and Vodafone, who will come to regret not securing a deal as the chance to take over another operator like T-Mobile is a once-in-a-lifetime opportunity. It also raises questions about the future ownership of 3 in the UK.’
Under the deal Alexander will become chief executive and Richard Moat of T-Mobile will be COO. The two brands will remain separate for eighteen months after which they could be integrated.
‘This deal will give Orange a dominant position and it is a coup for Tom Alexander to get France Telecom to back such an adventurous deal. He is getting his reward with the chief executive job,’ says Wood.
The combined businesses will employ 19,000 and have sales of £7.7 billion and earnings of £1.7 billion, based on pro forma 2008 figures.
‘Obviously a deal of this size is going to attract the interest of the regulators. But we believe there is a precedent in KPN’s acquisition of Telfort,’ says Wood.
The comparison will rub salt in any wounds at O2. It previously owned Telfort (O2 Netherlands) but sold it for 25 million only to see the new buyers turn it around and sell it for almost 1 billion to KPN, giving the latter a dominant position in the Netherlands.