UK mobile market shrinks with T-Mobile, Orange merger

The UK's third and fourth largest mobile network operators, Orange and T-Mobile, will combine in a new joint venture this fall, the companies announced today. If authorized by antitrust regulators, the merger will create the single largest mobile company in the United Kingdom, with an estimated 28.4 million subscribers, or roughly 37% of the market.

While the British mobile phone market is much smaller and denser than its American counterpart, there are some similarities occurring between the two markets that are important to consider. Currently the largest UK operator with a 27% share is Telefonica's O2, which is the exclusive iPhone carrier like AT&T in the US. In second place with 25% of the British market is Vodafone, the company which jointly owns Verizon Wireless, the second place US carrier. The merger of Orange and T-Mobile in the UK would be like Sprint and T-Mobile merging in the United States, breaking up the market into thirds.

T-Mobile this morning reported that its integration with Orange could create approximately €4 billion in synergies.

Though both Vodafone and O2 were recently reported to have made bids on T-Mobile, a mutual interest was shared between executives at Orange and T-Mobile. Orange's CEO Tom Alexander, for example, came to the company in 2007 from T-Mobile-owned MVNO Virgin Mobile. Alexander will become the CEO of the joint Venture, and T-Mobile's CEO Richard Moat will take over as COO.

For the first 18 months of the joint venture, both brands will remain separate. T-Mobile this morning said that period will be used to "review branding alternatives" for the new company.