Orange and T-Mobile ponder stock float for merged company

Orange and T-Mobile are mulling a money-spinning stock market flotation for their merged UK mobile business.

A London quote is one of the options under consideration as the two mobile phone operators put the finishing touches to the biggest telecoms deals in years, Orange boss Tom Alexander said.

A float would allow Orange owner France Telecom, and Deutsche Telekom, which owns T-Mobile, to cash in on the mammoth profits uplift that the merger will bring.

The European phone giants expect to wring out annual cost savings of £450million by bringing together the UK's third and fourth biggest mobile operators.

Analysts believe the combined business, which would control around 37 per cent of the UK mobile market, is worth around £10billion.

But Alexander, who'll run the enlarged operator, stressed that any separate listing is a long way in the distance.

The European competition watchdog won't be handed detailed merger plans until late October, and will then take at least three months to investigate the deal. Even if the merger gets the green light, the companies will retain the Orange and TMobile brands for a further 18 months.

'It's all a possibility,' said Alexander said when asked about a listing. ' But we're at a very early stage.'

Alexander, a former boss of Virgin Mobile, admitted that having two equally powerfully shareholders would also have a bearing on any future flotation.

'Fifty-fifty joint ventures are tough to construct ... but both sides have gone into this with their eyes wide open,' Alexander said.

The newly created telecoms giant will control around two in every five mobile customers in the UK, prompting fears that customers will lose out.

However, Alexander insisted that the merger would be 'good news' for consumers as the mobile giant will be better able to compete with market leaders O2 and Vodafone.

After showing signs of strain earlier in the year, mobile phone users appear to have regained some of their lost confidence, according to the Orange boss.

'In the earlier part of the year more customers are getting behind with their bills and waiting until pay day to top up their phones,' said Alexander.

'But since early August there has been a marked pick-up in footfall in our stores.'

Source: The Mail, 22nd September 2009

Back to News »