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Deutsche Telekom and France Telecom Form New Joint Venture

When you buy in bulk you save right?

That's the idea behind a new procurement joint venture announced today by Deutsche Telekom AG and France Telecom-Orange. The two European telecom vendors will be pooling their buying power for network equipment and IT infrastructure in a 50/50 joint venture. The new joint venture is expected to be finalized by the fourth quarter of 2011.

As to why the two telecom giants are joining forces, it's all about saving money, lots of money.

Deutsche Telekom AG and France Telecom-Orange expect to save as much as $1.3 billion Euros after three years of implementation, due to the buying synergies and economies of scale that the new joint venture will generate.

"Operators are expected to invest more than ever in networks and infrastructure as data usage increases exponentially and efforts to reduce the digital divide are being ramped-up,” said Edward R. Kozel, Chief Technology and Innovation Officer of Deutsche Telekom in a statement. "With France Telecom-Orange we have an experienced and trusted partner who shares the same approach regarding economies of scale as well as customer benefits in technology harmonization."

The new joint venture will include staffers from both Deutsche Telekom and France Telecom-Orange with operational units in both Paris and Bonn.