T- Mobile and Orange due to merge
Big news this week in the telecommunications industry as T-Mobile and Orange announced plans to merge in a joint venture intended to capture the UK mobile phone market. The proposed deal is a 50-50 venture that could end up seeing the T-Mobile/Orange partnership taking hold of over 30 million subscriptions and a whopping 37% of the UK mobile phone market. The new deal would see T-Orange relegate O2 to 2nd place with 27% of the market, Vodafone to 3rd place and Three to fourth place with only 8% of the UK mobile market. Experts suggest that the merger could see a new super company emerging with estimated sales of over 8bn per year.
A spokesperson for the companies stated that the merger could potentially cost anywhere between £500m – £800m and it would see a number of cost saving measures put into place. This would include a number of store closure, phone masts being decommissioned and inevitably job cuts within both companies. It was further suggested that over time an estimated £3.5bn would be saved due to the merger.
The UK mobile phone market is currently incredibly competitive, with a number of companies offering a multitude of different phones, various tariffs, and a plethora of mobile broadband and pay as you go mobile broadband packages. However, although things look bright for T-Mobile and Orange, consumers may find that they will get the raw end of the deal. At present the competition is so high in the UK market, and the rewards so lucrative, that firms are forced to offer increasingly cheaper deals in order to win over consumers, but they may soon all end if the merger succeeds. Chris Watson a lawyer for CMS McKenna stated that “UK mobile phone operators would welcome consolidation in the sector,” but he added “firms see the current levels of competition as ‘ruinous’ because of how low they had to keep prices to win customers.” Awww poor multi-billion pound mega-conglomerate companies, my heart bleeds for them.
So the bad news for consumers is that reduced market competition and a merger between two of the biggest mobile phone companies in the UK will see a reduction in cheaper tariffs and packages, and potentially could lead to more expensive contracts when it comes to renewal time. The deal is set to be investigate by the monopolies commission before any go-ahead is given to the merger.
Once again consumers get the raw end of the deal...
2 Comments to “T- Mobile and Orange due to merge”
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I can’t see this getting past the regulators – not a hope! Or perhaps that’s just wishful thinking on my part; I’m a Vodafone shareholder, so I don’t want to see them muscled out of the market…
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