Consolidation
Here's one we didn't see coming: France Telecom and Deutsche Telekom are in talks to merge their respective UK operations - Orange and T-Mobile - to make the UK's biggest mobile phone operator.
The 50-50 joint venture doesn't seem to have a name yet, but as the third and fourth largest operators in the UK currently, the two clearly decided they had to do something to take the fight to O2 and Vodafone.
Timotheus Höttges, CFO of Deutsche Telekom, said: "We will become market leader - our customers will benefit in many ways, for example from the best mobile broadband offer in Britain. In the second-biggest market in Europe, which is undoubtedly one of the toughest and most competitive, we are giving T-Mobile UK a clear and strong future. And, with our partnership, we have taken the most value enhancing strategy for Deutsche Telekom and its shareholders."
Gervais Pellissier, CFO of France Telecom added: "By combining our operations in the UK, we anticipate the long-awaited consolidation in one of Europe's most competitive markets, thereby creating a well positioned player. Our shareholders will benefit from higher profitability and an immediate cash flow per share accretion without impacting the overall indebtedness of the parent companies."
They expect the deal to be completed by the end of October, and it would be surprising if it raised any competition concerns. The two brands will continue to exist separately for 18 months after completion.
