Deutsche Telekom and France Telecom, the parents of T-Mobile and Orange in the Uk respectively, have formally signed off the deal to combine their UK network operations in a single joint venture.
Reuters quoted Deutsche Telekom chief financial officer: “Deutsche Telekom and France Telecom have committed themselves to a long-term partnership with this joint venture contract.”
The agreement comes two months after the pair entered exclusive negotiations to pair their UK operations in a 50:50 joint-venture.
Deutsche Telekom is to contribute T-Mobile UK on a cash-free, debt-free basis to the venture, including T-Mobile UK’s 50 per cent holding in its 3G network joint venture with Hutchison and gross tax losses carried forward of at least £1.5 billion.
France Telecom is to contribute the whole of Orange UK including £1.25 billion of intra-group net debt in order to equalize the value of the contributions to the joint venture.
The deal remain subject to regulatory approval.
The new network operation will immediately leapfrog market leader Telefonica O2 UK into first place in the market, with around 37 per cent share and 28.4 million customers. Combined, the venture will have revenues of €9.4 billion (£7.7bn) and EBITDA of €2.1 billion (£1.7 bn)
The merger and integration of T-Mobile UK with Orange UK should generate savings in excess of €4 billion (£3.5bn).
O2 has around 27 per cent, Vodafone has 25 per cent, Orange has 22 per cent and T-Mobile has 15 per cent at present.