O2 and 3 bosses want UK-based probe into Orange/T-Mobile merger

published 7 January 2010

Rival mobile operators have called for Orange's merger with T-Mobile to be scrutinised by UK regulators rather than their European counterparts.

O2 and Three both argue that British authorities, rather than Brussels-based European Commission regulators, were best placed to evaluate the impact on the UK market of the proposed merger, which will create the biggest single entity of mobile subscribers in UK history.

Kevin Russell, head of 3UK, was quoted by the Financial Times as saying that UK-based authorities were "best positioned" to consider the deal's impact to the country and protect its consumers.

O2 chief Ronan Dunne agrees, telling the FT that the merger would leave a single entity holding a majority of the radio spectrum at 1800MHz, a frequency key to the development of 4G networking and an emerging technology expected to gain major traction in 2010.

According to the Financial Times article, combining Orange and T-Mobile's spectrum shares would undo a sharing agreement between the networks brokered by the government last year, another reason that it should be scrutinised domestically.

The mobile networks are not alone in wanting the deal looked at locally rather than in Brussels. UK groups Consumer Focus and the Communications Consumer Panel wrote to the European commissioner for competition last month requesting a UK-based investigation, while Ofcom suggested in a report entitled Mobile Evolution that it would like to be involved in scrutinising the merger.

"Some recent developments, such as the proposed merger between T-Mobile and Orange, may well have significant implications for our future work programme," the report read.

However, France Telecom and Deutsche Telekom, the parent companies behind the merger, want the European Commission's own regulators to look at the deal, as they believe it will be quicker than referring it to UK authorities. The commission itself will make the final decision on which group should lead the investigation.

T-Mobile and Orange signalled their intent to form a new joint venture in September, signing the final agreement in November. If given the green light, the merger will create the UK's largest mobile operator, with around 29.5 million subscribers.