Deutsche Telekom is exploring the possibility of a merger with Orange, Handelsblatt reports citing sources familiar with the matter. The plan is at an early stage, the report said, adding that it points to a long-term dimension of Telekom’s strategy.
The merger would take the form of a share swap because neither side could afford a classic takeover, one manager said. Through the merger, Telekom wants to create a dominant player in Europe that can compete with AT&T and Verizon overseas.
A spokesperson for Telekom said that the company does not comment on speculation. Currently, the focus is on the merger in the US [of T-Mobile and Sprint], the spokesperson added.
DPA reports that Orange has denied talks on a possible merger. Orange is not considering or discussing the issue, a spokesperson said.
Deutsche Telekom and Orange already cooperate. Eight years ago, the companies started a joint business for the acquisition of equipment and infrastructure, in an attempt to obtain lower prices. They also previously ran EE, the UK mobile operator formed from the merger of their separate mobile operations there. This year, the companies launched a smart speaker together. Orange called its version Djingo, while Telekom has called it Hello Magenta.
This lays the basis for the companies to benefit from a merger, which could bring further synergies, said one source familiar with the situation.
Since last year, Orange has granted access to its fibre network in Poland to Deutsche Telekom, and the two cooperate on mobile infrastructure in Poland for several years. The other major markets where they overlap are Slovakia and Romania, where Telekom is reportedly planning to sell its local subsidiary.
