Merger approval set to create biggest mobile phone operator

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 The 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 per cent 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.