FRANKFURT: Deutsche Telekom and France Telecom have launched exclusive talks to merge their British subsidiaries into the country's leading mobile operator, the German telecommunications group said Tuesday in a statement.

The two parent companies seek to merge their T-Mobile UK and Orange UK units in a jointly owned entity, Deutsche Telekom said.

With some 28.4 million clients, the new operator would have a 37 percent market share of the British mobile sector, making it the biggest mobile operator, it added.

The deal must still be approved by both groups' supervisory boards and by competition authorities. A contract finalising the deal was expected to be signed by the end of October.

Rumours of a tie-up between the two British subsidiaries had circulated for the past few days.

Deutsche Telekom has tried for months to find a solution for its troubled British mobile unit, and did not want to bear the costs of restructuring the operator alone.