Orange and T-Mobile get ready to become UK's largest mobile network

Orange and T-Mobile have entered talks to combine their operations in the UK.

Orange, owned by France Telecom, and T-Mobile, parented by Deutsche Telekom, could become a 50:50 joint venture company if the talks are successful.

Should the deal go ahead, the combined company will have more than 28 million customers, making it the largest operator in the UK by user numbers - leapfrogging current number one O2 - with 37 per cent of the total mobile market. Currently, Orange and T-Mobile are the third and fourth biggest operators in the UK, respectively.

An Orange retail shop in Birmingham (Image credit: Orange)

According to Gervais Pellissier, CFO of France Telecom, a merger would mean better coverage for users as well as "an enhanced capacity to develop new services and technologies", he said in a statement.

The company is expected to be headed up by Tom Alexander, current CEO of Orange UK, who will become the combined company's CEO. Richard Moat, now CEO of T-Mobile UK, will take the role of COO.

The deal - expected to close towards the end of October - would result in £445m of savings per year in operational expenditure from 2014 onwards, according to the two companies.

IT would be one of the major contributors to the savings, through "large-scale site rationalisation leading to significant savings notably in site rental expenses, network operations and maintenance expenses", the two operators said.

Cutting back on overlapping retail stores, customer service staff and support functions will also help provide the savings.