Abstract

In late 2009, Germany-based telecommunications company, Deutsche Telekom, and France-based telecommunications company, France Telecom, announced their plans to merge their UK subsidiaries - Orange and T-Mobile. The companies planned to create a 50:50 joint venture in a bid to combat competition from players like O2 and Vodafone UK. The synergies from the merger were expected to benefit both Orange and T-Mobile. The merger would help Orange gain a stronger foothold in the UK market while T-Mobile would enhance its brand value and offer better service to its customers. The JV also offered substantial benefits to the consumers in terms of better network coverage, broader distribution network, and improved customer services. Some analysts felt that the new venture would create some sort of monopoly in the market and threaten the survival of the existing players in the UK. On the other hand, some analysts raised doubts over the success of the merger citing cultural differences between the two companies.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand and discuss the rationale behind the Orange and T-Mobile merger in the UK.
• Discuss the advantages and disadvantages of this decision from both Orange and T-Mobile's view.
• Identify the challenges the joint venture is going to face in the future and explore strategies it can adopt to overcome the challenges.

Keywords

Merger, Acquisition, Joint venture, Post merger integration, Telecommunications market, UK, Orange, T-Mobile, France Telecom, Deutsche Telekom, Vodafone, O2, Global economic slowdown, Fair Trading