BT have been given the green light to go through with its £12.5bn takeover of EE after the competition watchdog ruled that the merger between the UK’s two largest telecoms companies would not harm competition.
The Competition & Markets Authority (CMA) decision to wave through the deal will finally give BT a mobile company, creating a communications giant covering fixed-line phones, broadband, mobile and TV. The deal will more than treble BT’s retail customer base with an additional 24.5 million EE direct mobile subscribers on top of the 10 million customers it already has.
The deal includes all of EE’s shares currently held by Orange and Deutsche Telekom who will receive 12 per cent in the new combined business and have a seat on the board.
BT’s chief executive, Gavin Patterson, was “pleased” that the CMA has given the approval. He said the “combined BT and EE will be good for the UK, providing investment and ensuring consumers and businesses can benefit from further innovation in a highly competitive market”.
The telecom company’s rivals including TalkTalk, Vodafone and Sky will be concerned by the decision to give BT the ahead with the takeover having lobbied the CMA to consider the effect such a dominance in the market would have competition and customers.
The concerns include BT’s Openreach operation which is responsible for the roll out of fibre optic broadband across the UK, providing the infrastructure for groups like Sky to supply their own broadband. BT having its own mobile arm has led competitor’s to worry that Openreach resources could focus more on supporting its own mobile division at their expense.
Sky told the Financial Times that “BT’s incentives to foreclose and disadvantage rivals will be made much stronger by the merger and extend into new mobile and hybrid communications market, which will make it even more difficult for regulation to prevent competition distortions”.
Vodafone voiced similar concerns in a complaint to the CMA in which it said that “BT already has a history of using its significant upstream market power to the detriment of customers, which will only increase following the acquisition of EE by BT”.
TalkTalk meanwhile said it was “concerned” by the decision and noted the regulator’s lack of decisiveness on some key aspects. In a statement issued to The Times it said it was “concerned by the CMA’s provisional clearance of the proposed merger between BT and EE. We note the CMA is divided over its findings in wholesale mobile and we will be studying these, alongside the full findings, before reporting back to the regulator in due course.”
BT is trying to hold off pressure to sell off its Openreach operation which is currently under investigation by Ofcom after Vodafone accused it of manipulating fibre-optic installation figures to avoid penalties.
The BT-EE deal is expected to be finalised by March next year, subject to approval by shareholders of BT and scrutiny from the Competition and Markets Authority.