The two parent companies seek to combine their T-Mobile UK and Orange UK subsidiaries in a jointly owned entity, Deutsche Telekom said.
With some 28.4 million clients, the new operator would have a 37 percent market share of the British mobile sector, making it the biggest mobile operator, it added.
Pro forma revenues for 2008 amounted to around £7.7 billion or€9.4 billion, the statement said, with core earnings of around £1.7 billion or €2.1 billion.
The tie-up would provide British clients with “expanded network coverage and enhanced indoor and outdoor network quality for 2G and 3G services,” the statement said.
Orange UK chief executive officer Tom Alexander was to take on the same post at the new company, and be seconded by T-Mobile UK CEO Richard Moat, it added.
The deal must still be approved by both groups’ supervisory boards and by competition authorities. A contract finalising the deal was expected to be signed by the end of October.
Deutsche Telekom has tried for months to find a partner for its troubled British unit, as it does not want to bear the costs of restructuring the operator alone.
Deutsche Telekom chief financial officer Timotheus Hoettges was quoted as saying that a joint venture would give T-Mobile “a clear and strong future” in what “is undoubtedly one of the toughest and most competitive” mobile markets.
His counterpart at France Telecom, Gervais Pellissier, added that the tie-up anticipated a “long-awaited consolidation” among British mobile operators.
The combined company was expected to generate cost savings in excess of £3.5 billion or €4.0 billion, the statement said.