Fears of weakening competition greet merger news of Orange, T-mobile in the UK

Mobile phone network operators Orange and T-Mobile, owned by Deutsche Telekom and France Telecom respectively, yesterday announced the merger of their operations to form a giant firm, which will become UK's biggest provider with one in three of all users. (See: Deutsche Telekom and France Telecom UK arms to merge)

Tom Alexandar current Orange chief who will head the new operation has promised better service with improved coverage and network quality. But a consumer group said the move would lead to less competition which is bad news for customers.

According a spokesman for one consumer group there remained serious potential for weakening of competition with an operator enjoying a 40-per cent share of the market.

The size of the share of the market that the company would command would gives it little reason to offer great deals, which would mean price rises the consumer group says.

According to Audrey Gallacher of Consumer Focus, the creation of a new mobile phone giant could shrink choice available to consumers and a market less eager for competition on prices.

At present Orange and T-Mobile are UK's third and fourth largest operators. The merger will see them overtake Vodaphone and O2.