EC expected to approve merger between Orange and T-Mobile

Britain's largest mobile phone operator is to be created this week as the proposed merger of Orange and T-Mobile is expected to win approval from European regulators, it was reported today.

The European Commission is predicted to fast-track the deal after both firms agreed to a number of concessions designed to assuage concerns of competition and industry watchdogs in the UK, according to reports in the Sunday Telegraph and Sunday Times.

The tie-up between France Telecom's Orange and Deutsche Telekom-owned T-Mobile - currently the UK's third and fourth largest operators - will give the combined firms a 37% market share and nearly 30 million customers.

It is understood that Orange and T-Mobile have agreed to give up some bandwidth, prompting the Office for Fair Trading (OFT) and regulator Ofcom to tell the Commission they are comfortable that the merger does not require further UK investigation.

The planned deal was announced last year as mobile phone operators struggle in a highly competitive and saturated UK market.

Consumer groups lobbied the OFT against the tie-up, while rival firms raised concerns about how the new entity would have a significant share of the radio spectrum at the 1800 megahertz range. This is suitable for next-generation wireless technology that will enable faster web surfing on mobile phones.

The Commission has until March 1 to decide whether to pass the inquiry back to the UK authorities, but it is understood that the negotiations behind the scenes mean the European body is likely to conclude that no further investigation is required.

A key concession is thought to centre on 3, Britain's smallest mobile provider, and its network sharing agreement with T-Mobile.

Regulators' concerns are understood to have been eased by new proposals to revise the arrangements.

Another concession will see the two firms relinquish about a quarter of their 1800 megahertz bandwidth.

T-Mobile UK was put up for sale by its German parent last year after a number of quarters of negative sales growth.

The firms have said the tie-up would result in better coverage and improved customer service, although they also warned of job losses among the combined 19,000 workforce.

Headquartered in Bristol, Orange employs 12,500 staff in the UK, while T-Mobile has a 6,500-strong UK workforce, with a head office in Hatfield, Hertfordshire.

In November, the pair said they hoped to complete the merger in the first half of 2010, conditional on approval by the relevant authorities.

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