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iPhone to go to new T-Mob-Orange joint venture? When!?

Just how quickly are people expecting this postulated merger between T-Mobile and Orange to be finalised? This year? Surely, it's going to take at least 18 months to get regulatory clearance?

The problem facing the

The question needs to be asked, after a rash of rumours about the iPhone contract going to the new joint venture, instead of with the current franchise with O2 in the UK. Rupert Neale seems to have started this latest flood of speculation last week:

O2, the current UK market leader, is expected to lose its exclusive rights to some versions of the iPhone next month. O2, which is owned by Telefonica of Spain, has come under fire from customers frustrated with the network’s poor 3G coverage

he wrote. He's attributing the suggestion to Gervais Pellissier, finance director of Orange’s parent company France Telecom, who apparently said: "We (the joint venture partners) are both very good partners of Apple in our domestic markets and have a very good chance to be a strong partner here in the UK." But this story actually started back in April, when Warwick Ashford suggested that the two merger partners would each get permission to extend their respective German and French contracts into the UK, starting this month.

The idea that the joint venture will have an iPhone contract may be entirely irrelevant, because sources looking a the "due dilligence" behind the deal reckon it can only work "if massive redundancies are implemented."

One financial analyst reckons the figures for T-Mobile in particular are very daunting. "If I were running the joint venture, I'd refuse to take the job without permission to dismiss eight out of every ten employees," this observer suggested privately at a convention last week.

Neither Orange UK or T-Mobile UK is heavily unionised, but even so, there will have to be job losses, and they'll need to be cleared. Nobody in the M&A business expects this to be done inside six months, and several veterans of the takeover business have wagged their beards sorrowfully and said: "Two years."

Whichever network does acquire an iPhone franchise will have to have good Wi-Fi backup, or iPhone users will pretty much bring their network to its knees with 3G data traffic. Orange does have a broadband (wired) offering, but it's hardly a ubiquitous Wi-Fi network; and T-Mobile's attempt to roll out a hotspot service in the UK has been a conspicuous failure.

Neale's analysis suggested that Apple blames O2 for over-pricing the iPhone. Anybody planning to charge very much less than O2 does, however, had better have excellent Wi-Fi offload contracts in place.