September 8, 2009

Rival phone companies to merge in Britain

Deutsche Telekom and France Telecom, rivals in the British mobile phone operations market, said they would merge to form the country's largest phone company.

The German and French companies said they would maintain brand identity, but form a 50-50 merger to streamline British operations, such as retail operations and telecommunications infrastructure.

Combined, the new partnership would include 28.4 million British customers and push the joint venture into the forefront of the market with 37 percent market share, The New York Times reported Tuesday.

The current market leader, O2, owned by Telefonica, a Spanish company, has 27 percent of the British mobile phone users.

The deal is expected to close in October and save about $5.7 billion, in annual operating costs.

Industry analyst John Strand said the merger was just the beginning, in an expected wave of mergers.

Many operators are having a difficult time competing in the current climate with the increased regulation and the intense competition over the price of mobile broadband, which many are now selling below cost, Strand said.