Merger go-ahead to create Britain's biggest mobile phone firm

UK competition watchdog the Office for Fair Trading (OFT) said it had withdrawn its concerns over the joint venture and the European Commission (EC) backed the deal after both firms agreed to a number of concessions designed to ease industry fears.

The tie-up between France Telecom's Orange and Deutsche Telekom-owned T-Mobile – Britain's third and fourth largest operators – will give the combined firms a 37 per cent market share and nearly 30 million customers.

Orange and T-Mobile agreed to give up some bandwidth and reached a new agreement with 3, Britain's smallest mobile provider, which has a network sharing deal with T-Mobile.

The OFT said the new arrangement ensured that 3's ability to compete in the retail market would not be affected by the merger.

Another concern from rival firms was 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 surfing on mobile phones.

The firms have since offered to divest a chunk of their bandwidth.

The UK regulator said yesterday it had cancelled its request that it be allowed to review parts of the merger "after the companies offered remedies that fully address the OFT's outstanding competition concerns".

European Competition Commissioner Joaquin Almunia said: "I am happy that we managed to resolve the competition issues in this case quickly in close co-operation with the member state concerned."

The deal was announced last year as mobile phone operators struggle in a highly competitive and saturated UK market.

T-Mobile UK was put up for sale by its German parent last year after a number of quarters of negative sales growth.

The firms have said the tie-up would result in better coverage and improved customer service, although they also warned of job losses among the combined 19,000 workforce.

Based in Bristol, Orange employs 12,500 staff in the UK, while T-Mobile has a 6,500-strong workforce and a head office in Hatfield, Hertfordshire.