T-Orange Will Tower Over It’s Rivals
As reported in an earlier post on the Mobile Broadband Blog, T-Mobile UK have finally confirmed rumours of a merger with Orange. This will create the largest mobile network in the UK, with a massive 37% of the market and a combined user base of over 28 million. This trumps current market leader 02 (27%) and Vodafone (25%) by a considerable margin.
The two companies will remain separate for 18 months whilst different branding options are considered. Existing customers shouldn’t notice any difference in their service until summer of 2012, when the new business is expected to be up and running.
What The Bosses Say
Timotheus Höttges, T-Mobile’s CFO said the merger was “the first step towards creating the new mobile champion in the UK“. The two companies promised the deal would “bring substantial benefits to UK customers” with increased network coverage, improved customer services. Tom Alexander, the current boss of Orange UK insisted that prices will fall as a result of the merger. He stated that “The whole objective is to give consumers even better value, to give them better coverage and lower prices”
The deal however is almost certain to fall under investigation by competition authorities in the UK and Europe. With one less mobile operator, it is hard to see how the UK mobile market will keep it’s competitive edge.
Losses And Savings
The reasons for the merger are clear. The two companies are expected to save almost £500m a year from job cuts, store closures and reducing their IT and network infrastructure. Analysts estimate that 5000 fewer mobile phone masts will be needed to support the combined network and that up to 1000 jobs will be lost in the re-structuring.
How Does The Merger Affect 3G Users?
Ironically, even though the actual number of 3G masts will decrease – as duplicates are removed – the actual 3G network coverage will probably increase. By rationalising their networks, a larger area of the UK can be served, which should result in better a geographical spread.
The merger could also be good news for new iPhone customers. Apple will be very interested in the size of the mobile giant and it could tempt them them away from their exclusive deal with o2. In the words of Tom Alexander “It does put us into a very, very strong position. 3G coverage is really important for supporting devices like the iPhone.”
Digital Britain
The merger is also likely to causes some headaches for Peter Mandelson and his plans for universal broadband throughout the UK. His proposal to redistribute the 900 MHz spectrum (currently being used for 2G services) was based on there being 5 mobile operators in the UK.
Many questions to be answered
The merger leaves many questions unanswered. For instance, how will it affect 3, who currently use T-Mobile’s 3G infrastructure for their network? And what about the virtual mobile network operators (VMNO’s) , such as Virgin Mobile who rely on T-Mobile for their infrastructure?
Needless to say, we’ll be hearing an awful lot about T-Mobile and Orange in the coming months. Their historic merger is likely to change the face of the UK mobile industry as we know it.
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Regardless of the size of the company created they have a long way to go before they match the likes of O2 and Vodafone in terms of decent mobile broadband coverage. In northern Ireland Orange and T-Mobile coverage is a complete joke.
Whilst this might be good news in terms of coverage etc I do worry for the people at the retail end of the operation. All those duplicate stores in towns across the country will have to close and that is likely to result in lots of lost jobs.