T-Mobile, the British arm of Deutsche Telekom, and France Telecom's Orange won EU regulatory approval on Monday (1 March) for their plan to merge after they pledged to give up some radio spectrum.
T-Mobile and Orange said in November their 50-50 joint venture would give them a market share of about 37%, putting them ahead of current British market leaders O2 and Vodafone Plc.
Orange is the number three player in the British market, followed by T-Mobile. O2 is owned by Spain's Telefonica. Deutsche Telekom and France Telecom have estimated synergy savings of more than four billion euros ($5.4 billion) from the merger.
"The (approval) decision is conditional upon the amendment of an existing network sharing agreement with Hutchison 3G UK (3UK), to ensure that there remain sufficient competitors in the market," the European Commission said.
The EU executive said in a statement that the other condition imposed on the companies was the sale of a quarter of the combined spectrum of the merging firms in the 1800 MHz band.
People familiar with the matter told Reuters in February the two operators had offered to release some radio spectrum and provide support to smaller operator 3 in a bid to get the deal approved.
3, the smallest mobile operator in Britain, has a network-sharing deal with T-Mobile. The support offered to 3 involved a renegotiation of that deal. The released spectrum could be used by rivals to run faster mobile broadband services.
Based on the commitments offered by the companies, British regulators have withdrawn their request to the Commission to review the planned merger, the EU executive said.
The two companies planned to keep the T-Mobile and Orange brands for the first 18 months and then review the strategy.
(EURACTIV with Reuters.)