Tie-up with Orange is 'vital' for T-Mobile

On call: T-Mobile will gain a 37% share of the UK market in an Orange merger

11 April 2012

T-Mobile needs to merge with Orange in the UK or the two groups will struggle to compete with the biggest operators, the boss of the German firm's British arm said as he set out his argument to regulators.

Speaking at the Telecomfinance 2010 conference in London, T-Mobile UK's managing director, Richard Moat, said scale was vital to success in the mobile business and smaller firms such as his were struggling to compete.

"The merger is definitely necessary to take on the competition," he said.

Deutsche Telekom's T-Mobile and France Telecom's Orange have agreed to form a 50-50 venture that would grab the top spot in Britain with a market share of about 37 per cent, ahead of Vodafone and leader O2. They are waiting to hear whether the European Commission or British authorities will examine the merger.

"Without change, the smaller-scale network operators, of which Orange and T-Mobile are two, would not be able to compete across the board with the two big operators," Mr Moat said. "We just don't have the necessary scale and scale in mobile telecoms is vital."

Analysts have said a merger between the operators could help all the players in the British market as it removes a competitor, but the two sides will still have to persuade regulators the deal would not damage the offers available to customers.

Mr Moat said T-Mobile's fortunes had started to turn around by the end of last year, but the merger was still vital for long-term success.