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Orange denies rumors of DT merger, but the logic is appealing

Rumors resurfaced last week that two European giants, Deutsche Telekom and France’s Orange, were discussing a potential merger. The reports were quickly denied by Orange, which said there was “no project or discussion” on this matter, but nevertheless, some market analysts lent credibility to the story. Even if talks are early, or non-existent, now, the discussion highlighted several important trends in European telecoms. One is that, in a saturating and over-competitive region for mobile services, consolidation would be the order of the day, if mergers were not sometimes blocked by European Union and national competition regulators. A combination of DT and Orange would build on existing cooperations and allow both to generate significant economies of scale. However, even though the…

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