T-Mobile UK and OrangeÔÇöthe┬áUK mobile phone operations of Deutsche Telecom and┬áFrance TelecomÔÇöare to merge, creating the UKÔÇÖs biggest mobile phone firm.
The UKÔÇÖs three biggest playersÔÇöO2, Vodafone and OrangeÔÇö have been in discussions with Deutsche Telecom, T-MobileÔÇÖs German parent, for the past two months.
The new operator will have almost 30 million customers and 37 per cent of the UK market, pushing O2 and Vodafone into second and third position respectively. Orange currently has a 22 per cent share, and T-Mobile 15 per cent.
Annual sales for the merged firm will be in the region of ┬ú8.2 billion (Ôé¼9.4 billion).
The cost of the deal is predicted to be around £600 million to £800 million, which will include decommissioning mobile phone masts, shutting down some stores and other areas of streamlining. Savings are expected to reach around £445 million by 2014.
Commenting on the deal, Timotheus H├Âttges, CFO of Deutsche Telekom, said: "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.
ÔÇ£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.
ÔÇ£This will reinforce fair competition and will provide strong benefits for our customers through improved coverage, quality of service and an enhanced capacity to develop new services and technologies."
There has been speculation that Deutsche Telecom rejected bids of around ┬ú3.5 billion to ┬ú4 billion from Vodafone and O2ÔÇÖs Spanish parent Telefonica, as these were too low.
The terms of the deal are expected to be finalised by November.
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