Orange and T-Mobile plan merger to create No1 UK operator

LONDON - France Telecom and Deutsche Telekom have confirmed they are in talks about merging their UK mobile phone operators Orange and T-Mobile in a move which would create the biggest provider in the country.

If the deal goes through, marketing spend would be reduced by almost a third and either the T-Mobile or Orange brand could disappear from the high street.

Under the proposed merger, T-Mobile UK and Orange UK will continue operating separately until 2010. The companies will then enter an 18-month review period to work out the brand strategy.

During this time both brands will be retained, but customers will be told about the benefits of being part of the merged networks. The new brand is due to be implemented in the first half of 2012.

Tom Alexander, who is currently chief executive of Orange UK and will become chief executive of the joint venture, said that consideration of the brand strategy would be of vital importance.

He said the merger would reduce what the companies spend separately on marketing by 30%. As well as those savings, a number of T-Mobile and Orange shops will be closed, although the merger will mean it still has the biggest retail network.

T-Mobile retains Saatchi & Saatchi for its advertising, most recently creating a series of ads based on a karaoke flash mob event it held in Trafalgar Square in April. MediaCom handles its media planning and buying.

Orange retains a number of creative agencies, including Fallon and Proximity London. Its media agency is Mediaedge:cia for offline media and i-level for online.

The deal will require approval from competition authorities, but the companies said they hoped it would be completed by the end of October.

The deal gives each company a 50% share in the joint venture. Based on subscriber numbers in December 2008, it will give the company 28.4 million customers, representing 37% of the total UK market. It will have combined revenues of around £7.7bn.