A new regulation to be announced by government officials sometime this week may adversely affect the T-Mobile and Orange merger. The merger has been plagued by adverse criticism and fears ever since it was announced in September this year.

It is believed that the merger between Deutsche Telekom’s T-Mobile and France Telecom’s Orange would create an operator with a 37% share of the market. This means the new entity will command a huge slice of the market. Concerns have been voiced over this and over the fact that competitiveness in the industry will be severely limited by the presence of a single operator that will own the majority of the telecom market share.

Acting on fears in the industry and prompted by issues raised by industry analysts and broadband operators alike, the government appears to have made the decision to impose a limit on the ownership of broadcast spectrum by a single operator. This will effectively hold up any developments towards finalising the merger. The reallocation of spectrum among top providers is seen as an equitable distribution solution to ensure better broadband across all locations.

The regulation is viewed as part of the government’s ongoing initiatives to bring 2 Mb broadband across the UK by year 2012. If the regulation goes through, T-Mobile and Orange may well end up selling some of their spectrum to go ahead with the merger.

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