Talks of a possible merger deal between Deutsche Telekom and Orange have now officially ended after both entities failed to reach agreement. The two telecommunication firms engaged in protracted discussions between May and September but ultimately failed to strike a deal.
The French press have made the claim that the deal broke down because Deutsche Telekom which is headquartered in Germany is simply far bigger than Orange. A source close to the negotiations said it was simply not feasible for Deutsche Telekom to agree on a deal that would have put both companies on an equal footing.
It has been claimed that Deutsche Telekom’s market value is around €70 billion whilst the French-based Orange is valued at around €40 billion. It is believed that the negotiations have formally ended and the deal is believed to be dead in the water. It is highly unlikely that the two will meet in the future in an attempt to thrash out a new merger, although some in the fiscal sector believe that another round of talks could happen as there is a desire to renew cooperation between France and Germany.
The French and German governments both hold significant stakes in both Orange and Deutsche Telekom and both were briefed on how the negotiations were panning out between May and September. However, many analysts have claimed that if a merger was agreed that would have inevitably led to political complications between the two countries.
In addition to this, it has also been highlighted that the two telecommunications colossuses have overlapping businesses in Romania, Poland and Slovakia which would have raised regulatory and ethical concerns whilst reducing the business logic behind such a partnership.
A source told Reuters that the details of the deal were studied extensively but no agreement could be reached. "It was studied by internal teams. But people quickly came to the conclusion that nothing could be done as Deutsche Telekom is far bigger than Orange."