France Telecom says it is confident that its proposed merger of its Orange network in Switzerland with TDC’s Sunrise will be passed by regulators, claiming it will bring fresh competition to the Swiss market – one of the most expensive mobile markets in Europe. “It is a bit difficult to reproach two operators with 20 percent [of the market] for wanting to combine to make [nearly] 40 when you have a market leader which has 60 percent,” commented Gervais Pellissier, deputy CEO of the French group, reports the Financial Times. But he added that it was not “100 per cent guaranteed” that the competition authorities would pass the deal. France Telecom and Denmark’s TDC announced earlier this week that they plan to merge their Swiss mobile networks in order to create a powerful rival to the market leader, Swisscom. The new firm will become an operator with approximately 3.4 million mobile and 1.1 million fixed and broadband customers, accounting for a 38 percent share of the Swiss mobile market and 13 percent of the country’s fixed broadband connections.

The deal follows a similar move by France Telecom in the UK where it is in the process of merging its Orange UK network with Deutsche Telekom’s T-Mobile UK into a 50:50 joint venture. However, the deal in Switzerland will see Orange as the dominant partner; France Telecom will become a 75 percent shareholder in the combined entity, while TDC will hold the remaining 25 percent. The deal also includes a number of options for TDC to exit the business over the next few years, either via an IPO or selling its stake to Orange. Indeed, TDC has already hinted that the merger could be the first step in the Danish firm exiting Switzerland altogether. “[The deal] is a natural last step towards TDC focusing on the Nordic markets, which is our strategic goal,” said TDC CFO Jesper Ovesen. According to Wireless Intelligence data, Swisscom dominates the Swiss mobile market with an estimated 62 percent market share (5.5 million connections) in 3Q09. Sunrise is currently second on 1.9 million (a 21 percent market share) and Orange is third on 1.6 million (18 percent).