The Dow Jones and WSJ are reporting that Deutsche Telekom, T-mobile’s parent company, and France Telecom, Orange’s parent company, have agreed a deal that will see T-Mobile merge with Orange to create the UK’s largest telephone company.

The 50-50 venture will see Britain’s market leader O2 service lose its number one position, and the newly formed independent company taking 30 million subscribers and 38 percent of the U.K. market.

Earlier today, the Financial Times reported that Vodafone and Telefonica SA (O2’s parent company) were in the running to acquire T-Mobile UK for about ￡4 billion (US$6.6 billion). However, the Guardian reports that T-Mobile UK’s management preference is for a merger with Orange – as the cash bids from Vodafone and Telefonica SA are lower than its owner Deutsche Telekom had been expecting.

T-Mobile U.K. has been widely considered to be on its last legs after Deutsche Telekom CEO Rene Obermann stressed the need for consolidation in Europe in May.

The U.K. market is enormously competitive and up until now, lead by O2, but also includes Vodafone, T-Mobile and 3. If confirmed, the deal will catch the attention of the U.K. Office of Fair Trade who are to get involved in any transaction that takes a companies market share past 25%.

The deal would also force the UK government to rethink its plans for rolling out reasonably fast broadband to everyone in Britain by 2012 reports The Guardian. That plan, set out in June’s Digital Britain report, aims to get the mobile phone companies to agree to share out of their wireless spectrum.

Lightspeed Venture Partners and Pitango Venture Capital are pouring more capital into WeFi, operator of a global, community-based network of WiFi hotspots, in an undisclosed Series B round of funding and following an earlier round by both investors secured back in May 2007. The follow-up financing was provided to support WeFi’s business and financial needs, and according to the release is being allocated toward expanding development, marketing efforts, and strengthening unspecified partnerships.

The WeFi community so far has mapped over 30 million WiFi access points, and counting. Next to this directory and the community formed around it, the startup boasts a free software program that allows users to automatically connect to WiFi locations wherever they are. The tool, which was previously only available for Windows and Mac users, is increasingly finding its way to mobile devices, which makes a lot of sense. More specifically, the company has recently introduced applications for the Windows Mobile, Android and Symbian platform.

Additionally, WeFi recently announced the launch of WeROK, a mobile entertainment / communications portal as well as the opening of WeFiApps, a WiFi powered app store for mobile tools.

WeFi was established in February 2006 by Yossi Vardi, Tamir Scherzer, Arnon Kohavi and Shimon Scherzer, and is incorporated in Delaware, U.S. with R&D facilities in Israel.

Streaming music service Spotify has release a video of the iPhone app which they’ve just submitted to Apple, which means it could be out in a few weeks. They’ve also revealed more of their business model - mobile access on any device will require a premium subscription.

Interestingly, you’ll be able to use the app when there is no wireless connection. The application has an offline mode that allows users to temporarily cache playlists to their phone for use when there is no connection.

It will be interesting to see Apple’s response to this - will they allow a direct competitor to iTunes one their iPhone? As I blogged a few weeks ago, I think the streaming music space is exciting at the moment and this will be the first of many interesting exchanges between Spotify and Apple. Maybe they should just join forces?

E-Reader, the Amazon Kindle, has seen some success in the US, with founder Jeff Bezos quoting sales are already at 35 percent of the same books in print – just 18 months after launch. By any standard, that is rather impressive…

Whether you’ll be snapping one up or not, you should get your chance in time for Christmas, when the Kindle is likely to be available to UK shoppers.

Mobile reports that Amazon is in discussions with a UK mobile operator, and says the company has outsourced all aspects of manufacturing for the Kindle in the UK to Qualcomm, a wireless telecommunications research and development specialist who offer a range of services and will deal with all aspects of manufacturing the Kindle for the UK market including securing connectivity with an mobile operator.

Discussions with potential partners, including Vodafone, Orange and 3, have reportedly collpased but agreements with book publishers have already been made, and is in the process of negotiating with news and magazine publishers in the UK over digital reproduction rights.

Vodafone is launching its own version of the Kindle in Germany, while Orange is working on an ebook in its domestic French market.