Orange and T-Mobile merger suffers setback

Orange and T-Mobile may have to sell some network spectrum

UK regulatory authorities may stop the deal between Orange and T-Mobile going ahead because of the dominance it would give the two firms in the mobile phone market.

According to a report in The Guardian, which cites no sources, the government is working with five of the UK's main wireless network providers to impose limits on the amount of spectrum each operator can own.

The Office of Fair Trading (OFT) will probably need to ask the European Union for permission to investigate the deal because Deutsche Telekom owns T-Mobile, while France Telecom owns Orange.

The report said that the OFT will be given responsibility for deciding how much spectrum the networks are allowed.

The UK mobile phone market is currently dominated by O2, which has 27 per cent of the market, followed by Vodafone with 25 per cent, and Orange with 22 per cent.

If Orange and T-Mobile merge, the partners will hold 37 per cent of the market. The government believes this percentage is too large for the competition, and that the operators may have to sell network spectrum, the report said.

Orange and T-Mobile were not available for comment.