Orange and T-Mobile Merger in the UK

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Case Details:

Case Code : BSTR354
Case Length : 14 Pages
Period : 2007-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : Orange UK / T-Mobile UK
Industry : Telecom
Countries : UK

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The T-Mobile / Orange UK merger has the potential to work beautifully, and all the ingredients are in place for the joint venture to be successful. The potential is there for the merger to deliver a massive network opex saving for the two partners, and it also puts new pressure on UK competitors such as Vodafone and O2, who may now be stuck with a high cost structure than their new rival - which [will]be reflected in their tariffs to customer." ¹

- Bengt Nordstrom, Co-founder and CEO, Northstream², in September 2009.

"It's [merger with France Telecom is] probably positive (for Deutsche Telekom) and better than doing nothing. But whether it is the best option is debatable." ³

- Lawrence Sugarman at ING⁴, in September 2009.

Introduction

On September 8, 2009, Deutsche Telekom AG (Deutsche Telekom), a Germany-based telecommunications company, and France Telecom SA (France Telecom), a France-based telecommunications company, announced that their respective UK subsidiaries, T-Mobile UK (T-Mobile) and Orange UK (Orange), would be merged into a 50:50 joint venture (JV). This was a bid to combat the increasing competition in the crowded telecom market in the UK. The new venture was expected to create the biggest mobile operator in the UK and pose a challenge to market leaders, O2⁵ and Vodafone UK⁶ (Vodafone), according to experts.

Orange and T-Mobile Merger in the UK - Next Page>>

1] Keith Dyer, "Orange T-Mobile Deal - Follow the Comment Here," www.mobileeurope.co.uk, September 8, 2009.
2] Northstream offers strategic consultancy services for network and handset vendors, mobile operators, and the industry in general.
3] Nicola Leske, "T-Mobile and Orange Set to Merge," www.bnet.com, September 7, 2009.
4] Founded in 1991, International Netherlands Group (ING) is a financial institution headquartered in Amsterdam, the Netherlands. As of 2009, it had a client base of 95 million private, corporate, and institutional entities.
5] Founded in 2001, O2 is a telecom operator in the UK that offers mobile and broadband services to customers and businesses. In 2008, it had a 27 percent share in the UK mobile market.
6] Founded in 1985, Vodafone UK is a subsidiary of the world's leading telecommunications company, Vodafone Group Plc. It offers mobile and Internet services. In 2008, it had a 25 percent market share in the UK mobile market.

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