France Tel and Deutsche Tel join forces to cut costs

FRANCE Telecom and Deutsche Telekom plan to jointly buy network gear, mobiles and other information technology to save money, the two groups said yesterday.

The project has the potential to save about €1.3bn (£798m) annually after three years -- a little under €900m for France Telecom and around €400m for Deutsche, they said.

The companies plan to finalise the formation of a 50-50 jointly owned and operated venture in the coming weeks, subject to board approval and antitrust clearance.

“The new joint venture will offer a more efficient sourcing organisation that will lead to more effective partnerships with suppliers,” said Olaf Swantee, executive vice-president at France Telecom.

The tie-up is the latest step in an initiative the groups unveiled in February, which identified five areas of cooperation, including radio access network sharing in Europe.