UK's largest mobile operator to be created by Orange/T-Mobile merger

The future is bright for planned combination of UK operators

T-Mobile brand will be maintained for 18 months

The UK's biggest mobile operator is to be formed after Deutsche Telekom and France Telecom announced negotiations to merge T-Mobile UK and Orange UK into a 50:50 joint venture.

The move would give the new entity 37 per cent of the UK market with 28.4 million customers and revenue approaching £8bn. The current market leader is O2 with 27 per cent market share.

The combined operation would have Orange UK chief executive Tom Alexander as chief executive with T-Mobile chief executive Richard Moat becoming the chief operating officer.

The deal has to be rubber-stamped by UK communications regulator Ofcom.

However, the tie-up throws up several issues for other UK mobile operators. What, for example, will the new mobile operator do about Virgin Media's access to T-Mobile's infrastructure, and T-Mobile's shared infrastructure with mobile operator 3?

In a joint statement the two firms said: "T-Mobile UK and Orange UK brands will be maintained separately for 18 months after completion of the transaction. During that period management will review branding alternatives for the joint venture and will develop a new branding strategy recommendation for shareholder approval."

Current market shares for the five UK mobile operators are O2 at 27 per cent, Vodafone with 25 per cent, Orange with 22 per cent, T-Mobile at 15 per cent, and 3 with around 6 per cent.