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BT's £12.5bn takeover of EE cleared by competition watchdog

Published 15/01/2016

Telecoms giant BT announced in February last year that it had agreed to acquire EE
Telecoms giant BT announced in February last year that it had agreed to acquire EE

The clearance of BT's £12.5 billion buyout of mobile phone firm EE by the competition watchdog has sparked a wave of industry concern about what the mega-merger will mean for consumers.

The deal was given the green light by the Competition and Markets Authority (CMA), and will create a combination that will have around 35 million mobile, broadband, and TV customers.

John Wotton, who chaired the CMA inquiry into the deal, said the evidence "does not show that this merger is likely to cause significant harm to competition or the interests of consumers".

But a number of industry and consumer bodies said the deal will create a powerful player in the UK media and telecoms market.

Rival TalkTalk said: "We are disappointed, although not surprised, that the CMA has waived through the BT/EE merger, even though the new entity will be even more dominant than it was before privatisation 30 years ago."

Which? executive director, Richard Lloyd, added: "Fewer players in a market is rarely a good thing, but now this deal has been approved both companies must urgently address their abysmal customer service record.

"The regulator will need to keep a very close eye on this to ensure consumers really do benefit from the deal and be prepared to step in if not."

The deal hands BT 35% of the mobile consumer market and a similar share of the UK's consumer broadband business.

BT will be able to offer bundles of telecoms, TV, broadband and mobile to its customers to compete better with rivals such as Sky and Virgin Media.

Gavin Patterson, BT chief executive, said: "The combined BT and EE will be a digital champion for the UK, providing high levels of investment and driving innovation in a highly competitive market."

Last year mobile operator O2 agreed to a sale to Hong Kong conglomerate Hutchison Whampoa, the owner of rival operator Three, for £10.3 billion, further increasing the consolidation across the UK media and telecoms markets.

Aside from this deal, regulator Ofcom is carrying out its first significant review of the telecoms sector for a decade, and is considering options including a split of BT networks business Openreach.

Openreach provides the final mile of network connection into consumers' homes, and is used by rival operators.

Rivals regularly complain about the service Openreach offers, but many industry analysts forecast Ofcom recommendations will fall short of splitting the business away from BT.

Vodafone said: "We are reviewing the CMA's document in full. As previously stated, we believe it is imperative that the wider market concerns relating to BT Openreach raised by a number of parties and recognised by the CMA, need to be thoroughly scrutinised by Ofcom."

Ofcom's Digital Communications Review is expected to be published next month.

Andy Kerr, deputy general secretary of the Communication Workers Union welcomed the news, adding: " The CWU, which has members in EE as well as BT, will continue discussions with the company in terms of how our EE members will be incorporated into the wider BT Group.

"While this will mean greater opportunities for BT to provide a seamless connectivity for their customers, for the CWU this creates an opportunity to grow our union and ensure our EE members are welcomed and protected within the BT family."

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