Orange and T-Mobile Merger in the UK
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Case Code: BSTR354 Case Length: 14 Pages Period: 2007-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Orange UK, T-Mobile UK Industry: Telecom Countries: UK Themes: Mergers and Acquisitions, Joint Ventures |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
About Orange UK
The history of Orange dates back to the early 1990s when it was set up as a subsidiary of Hutchison Telecommunications International Limited (HTIL), a Hong Kong-based telecommunication service provider, on April 8, 1994...
About T-Mobile UK
The history of T-Mobile dates back to September 1993, when Mercury Communications Limited launched its first Digital Personal Communications Network through its mobile operation, Mercury One2One. In 1997, the mobile operation was rebranded as One2One and the 'pay as you go service' was launched in the UK...
The Rationale for the Merger
T-Mobile was a competitive player in the UK market till 2007 with 17.3 million subscriptions. However, the number of subscriptions fell to 16.8 million in 2008. Even as its performance was deteriorating, other operators such as O2 and 3UK were witnessing an increase in market share...
The Deal
Under the deal, it was decided that T-Mobile and Orange would be merged to form a 50:50 JV. To create the JV, Deutsche Telekom planned to contribute 50 percent stake in 3UK and gross tax losses carried forward, amounting to £ 1.5 billion...
The Synergies
The main benefit to France Telecom was that Orange's merger with T-Mobile would fortify its presence in the UK telecom market. Analysts felt that France Telecom could strengthen its presence without incurring additional costs or debts. Moreover, Orange would attain efficiencies in operation and increase its market share in the UK, they said...
Some Initial Reactions
The Orange-T-Mobile merger received mixed reactions from employees, consumer groups, analysts, and the government. Since the combined entity was expected to have 19,000 workers - 12,500 employees from Orange and 6,500 from T-Mobile, the employees feared that there would be lay offs...
Outlook
Despite receiving a mixed response from several quarters, Orange and T-Mobile maintained that the combined entity would bring in a lot of benefits to the consumers including offers of bundled telecom offerings and better network coverage. It would also aim to enhance the indoor and outdoor quality of network for 2G and 3G services, they said...
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