EU approves Orange and T-Mobile merger

European regulators have given the go ahead for Orange to merge with T-Mobile UK and create Britain’s largest mobile phone operator.

The European Commission officially cleared the merger yesterday after the two companies had agreed to certain concessions. This means the deal will not be scrutinised by the Office of Fair Trading (OFT) in the UK.

The OFT, which called for the merger to be regulated on home soil last month, formally withdrew its request yesterday, “after the companies offered remedies that fully address the OFT’s outstanding competition concerns”.

The companies offered to divest part of their valuable 1800MHz frequency spectrum, particularly used for data services such as searching the internet on mobiles. They also offered to strengthen the deal with 3, the UK’s smallest operator, which previously had a network sharing agreement with T-Mobile.

Communications regulator Ofcom welcomed the move, saying “the agreed commitments from both parties are consistent with our objective of maintaining effective competition, which is in consumers’ interests”.

Tom Alexander, who will head up the merged company, said it was a “momentous day,” adding: “We are really, really pleased. This has taken a lot of hard work with the Commission, Ofcom, the OFT and 3.” The company will be officially merged by the spring, but won’t launch its first joint initiative until later this year.

The merged business will have a combined 29.5 million customers, leapfrogging Vodafone and O2 to become the UK’s largest operator, with its combined revenues last year equal to €8.5bn.

Yet, consumer group Which? raised concerns over the “indecent haste” of the approval saying protecting the interests of UK consumers had taken a “back seat”.

Which? chief executive Peter Vicary-Smith, said: “We’ll be keeping a close eye on how this merger affects the UK mobile market in the months ahead but we are concerned that regulators will be unable to take effective action should competition be weakened in the future.”