Deutsche Telekom, France Telecom Plan Mobile Merger in U.K.

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In an effort to boost its sagging mobile phone business, Deutsche Telekom Tuesday said it will merge its T-Mobile operations with France Telecom's Orange in the U.K.

The deal is expected to close in October, pending approval by the company's boards and British and European governments. Financial terms of the merger were not disclosed.

The 50-50 joint venture would create the largest mobile operator in Britain. According to Mobile News, the combined operations would catapult the new entity ahead of the U.K.'s No. 1 mobile operator, Telefonica O2, giving it roughly 37 percent share of the market and 28.4 million customers.

"In the second-biggest market in Europe, which is undoubtedly one of the toughest and most competitive, we are giving T-Mobile UK a clear and strong future," said Timotheus Hottges, Deutsche Telekom CFO, in a statement. "With our partnership, we have taken the most value enhancing strategy for Deutsche Telekom and its shareholders."

The companies plan to operate as separate entities for 18 months after the completion of the merger and until they create a unified brand. The merged operations will save the companies an estimated $5.7 billion by enabling them to shutter duplicate operations.

"By combining our operations in the U.K., we anticipate the long-awaited consolidation in one of Europe's most competitive markets, thereby creating a well positioned player," said Gervais Pellissier, CFO of France Telecom, in a statement. "This will reinforce fair competition and will provide strong benefits for our customers through improved coverage, quality of service and an enhanced capacity to develop new services and technologies.

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