T-Mobile UK and Orange in joint venture

Deutsche Telekom and France Telecom on Tuesday said they wanted to merge their British mobile-phone units T-Mobile UK and Orange UK to create a market leader better able to compete with two remaining big rivals. The two companies said they had started exclusive negotiations about putting their assets into a 50-50 joint venture by the end of October. The combined company would have 28.4m subscriptions or 37 per cent of the UK's mobile-phone user base. Deutsche Telekom would put its business into the venture free of any debt, while France Telecom would shift £1.25bn (€1.4bn) of intra-group debt into the venture to make up for T-Mobile UK's lower asset valuation. On top of that, France Telecom is set to receive £625m in cash. This would come as one-off payment from the joint venture, which would in turn refinance this transaction by taking a loan of similar size from its German parent.