Broadband services

BT Locks Down £12.5B EE Takeover Deal

Unhappy rivals
Meanwhile, some of BT's rivals have already started grumbling about the prospective merger. Speaking at an earnings press conference shortly after BT's announcement, Vodafone Group plc (NYSE: VOD) CEO Vittorio Colao called for a separation of the Openreach business. The takeover would create a dominant player in Britain's fixed and mobile markets and would need to be scrutinized, he said.

Earlier this week, Vodafone, which operates the UK's third-biggest mobile network, was reported to be preparing its own move into the converged-services market. By linking the Cable & Wireless network it bought in 2011 to BT's exchanges, it apparently aims to offer fixed broadband and TV services to its customers. (See Eurobites: Vodafone Plans Triple-Play in UK.)

Virgin Media -- the cable operator that Patterson cited as a key rival -- may also be concerned about the implications of BT's move given that it relies on an MVNO agreement with EE to provide mobile services.

Responding to analyst queries on that issue, Patterson insisted that BT was not a "reluctant wholesaler" and would maintain those MVNO arrangements. "We look forward to continuing our relationship will all EE's MVNOs, including the very big one," he said.

Another uncertainty is the network-sharing agreement EE has with Three UK , the UK's smallest mobile network operator. Should 3 owner Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY) complete its own £10.25 billion ($15.61 billion) takeover of O2, that agreement could look untenable. (See Hutchison Offers $13.9B for UK's O2.)

Patterson said it was "premature" to start talking about EE's arrangement with 3 and has recently suggested that regulators may block Hutchison's move for O2 out of concern about its impact on mobile competition. (See BT Puts G.fast at Heart of Ultra-Fast Broadband Plans.)

Even so, today's announcement from BT and EE will make Hutchison even more desperate to seal that deal.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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petercf 2/18/2015 | 5:05:22 AM
BT's real target If the deal goes through and EE maintains its lead position as the potential lead LTE operator to supply services to UK Govt't to replace the Airwave Tetra network then,

BT gains not only a mobile operation but also the "supply of all LTE Public Safety services to the UK Government and its agencies"- that puts BT as the monopoly player for both normal ethernet/LAN/WAN/fibre/voice services into government and MoD but also all of the public safety mobile services.

That is something for the competition commission to think about.
Ariella 2/5/2015 | 10:37:25 AM
Re: New Names @Gabriel That's the impression I got from this statement, "More seriously, BT is a good company, with good technology, and reliable services in the round."
Gabriel Brown 2/5/2015 | 10:34:41 AM
Re: New Names In what sense do you mean?

I'm optimistic Olaf Swantee will make out with a big bag of cash

There is a serious point in that most British people will have at least some of their pension invested in BT and Vodafone. From that point of view, I'm probably neutral.
Ariella 2/5/2015 | 10:28:25 AM
Re: New Names @Gabriel so overall, you're optimistic, I take it.
Gabriel Brown 2/5/2015 | 10:09:22 AM
Re: New Names I've come to like quite a bit of 80s music that at the time (as a child and scruffy teenager) I wasn't into. Duran Duran aren't quite there yet.

So, Ariella, no, it's not a bad thing, but good and bad together.

More seriously, BT is a good company, with good technology, and reliable services in the round. EE has done very well with 4G in a European context.

I can see why DT would want to own 12% of the largest operator in a wealthy, consolidating market, even if the short term cross-selling targets referenced in the article look ambitious.
Ariella 2/5/2015 | 9:56:30 AM
Re: New Names @Gabriel I take it you mean it will be a bad thing.
mendyk 2/5/2015 | 9:56:23 AM
Re: New Names Do you mean in a Duran Duran kind of way?
Gabriel Brown 2/5/2015 | 7:19:38 AM
New Names  

BT Everywhere

Everything BT

It'll be like the 1980s all over again in Britain.
iainmorris 2/5/2015 | 7:11:41 AM
Vodafone response Vodafone has reportedly announced plans to launch fixed and TV services by leveraging its C&W assets but one wonders if that will be enough to make it a strong competitor to BT/EE and various other converged services players. No wonder Colao sounds so concerned about the BT deal!
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