EC Set to Give Green Light to Mobile Merger

The proposed mega-merger of mobile operators Orange and T-Mobile in the UK looks set to get approval from the EC as early as this week, according to newspaper reports over the weekend. If the press is to be believed, the European Commission will reject an appeal by the Office of Fair Trading in the UK for the case to be passed back to it. The OFT has already said it fears that a joining of forces by the France Telecom-backed Orange and the Deutsch Telekom-owned T-Mobile would "significantly" reduce competition in the British mobile market. However, various newspapers now claim that the EC is happy this will not be the case.

One of the Commission's main concerns was over the future of fellow UK mobile operator 3. The EC has apparently received assurances from Orange and T-Mobile that they will extend their network sharing deal with the operator to 16,000 base stations across Britain. For its part, the OFT is expected to maintain its position that it believes the merger will reduce mobile competition to three players from five, unless the future of 3 is secured.

Last month rival mobile companies claimed the deal would create a "guerilla" which would have an unfair advantage via its "stranglehold" on 3G spectrum in the UK. A spokesman for the OFT said, at the time, "Our view is that the joint venture threatens significantly to affect competition in mobile telecommunications in the UK."

The two would-be partners have apparently agreed to give up 25% of their combined 1800MHz spectrum. Naturally, Vodafone and O2 have pushed for the merged entity to relinquish more of the spectrum; neither company has said if it plans to launch an official challenge.

Some analysts of the mobile industry believe that the different cultures and management styles found at the parent companies of each of the two operators, France Telecom for Orange and Deutsche Telekom for T-Mobile, could make such a merger difficult to pull off as the two sides struggle to work together.