Merger of T-Mobile and Orange will shake up market
-Ceri Stanaway is the telecoms expert at consumer champion Which? The opinions expressed are her own.-
In a move that’s likely to shake up the UK’s mobile market, Orange UK and T-Mobile UK have announced plans to merge their two mobile companies to, in their words, “create a new mobile champion”.
The new joint venture will create the UK’s biggest mobile operator, outstripping the UK’s two current market leaders O2 and Vodafone, with a combined mobile customer base for Orange and T-Mobile of around 28.4 million mobile customers. This represents around 37 percent of UK mobile subscribers, based on December 2008 figures.
In the short-term, customers are unlikely to see any big changes. The companies expect to sign off the merger at the end of October, but they plan to maintain the T-Mobile UK and Orange UK brands separately for 18 months following completion of the transaction and use that time to decide the best branding options for the new venture.
However the creation of a merged Orange and T-Mobile giant and reduction in the number of UK mobile operators does raise concerns about consumer choice in the long run, since this will form the biggest mobile operator in the UK and bring the number of networks down to just four.
Orange and T-Mobile say that the combination will bring benefits to UK consumers, including the ability to offer bundled telecoms deals in the future thanks to Orange’s share of the home broadband market.
Orange and T-Mobile currently offer very different ranges of mobile deals, and Which? hopes that the merged company carefully considers the needs of all its customers when making any changes to the tariff choices available in the future.
The merger also has the potential to bring improvements for Orange and T-Mobile customers in terms of better 2G and 3G network coverage, which could benefit both mobile phone and mobile broadband customers. But, Which? believes some of the savings made as a result of the merger need to be invested in better customer service, as neither company scores very well in Which? mobile customer satisfaction surveys.
There may also be an impact from a competition perspective on smaller networks such as 3, and virtual network operators such as Virgin Mobile – which currently “piggy-backs” on the T-Mobile network.
The final go-ahead on the merger is subject to competition scrutiny and approval by UK regulatory bodies the OFT and potentially the Competition Commission. If the OFT refers the merger to the Competition Commission, a final decision could be open to a review period of up to six months.
Which? will be keeping a close eye on developments and ensuring the consumer view is represented, throughout the process by regulatory bodies and beyond.