Telecoms Superpower: BT to buy EE

BT has today bought EE, the UK’s largest mobile network, which currently holds roughly 40% market share in the mobile operators’ sector. The move by BT, which cost them £12.5 billion, ensures they have a finger in virtually every pie in the telecommunications sector, with broadband, television, landlines, and now mobiles.

EE was only recently formed as a merger of Deutsche Telekom and Orange S. A’s UK brands: Orange and T-Mobile. EE currently has the most customers out of any mobile network for its 4G service (7.7 million), and the move will allow for important synergies between broadband and mobile internet, as well as ensuring significant economies of scale for BT in the future.

One of the key questions that remains though, is whether or not the Competition and Markets Authority will approve this acquisition given the dampening it will have on competition in the telecommunications industry. In addition to this, there is also significant speculation that the mobile operator Three is in talks to buy O2, as well as Virgin and Vodafone, which will lead to a significant decline in competition in the mobile network industry.

If it is approved by the Competition and Markets Authority, this deal will be extremely shrewd by BT, who have grown significantly over the last ten years. Interestingly, in 2002, BT sold its mobile operator spinoff, O2, to Telefonica for £18 billion, a figure £5.5 billion more than the amount they are paying for EE thirteen years later!

Is the BT-EE merger beneficial to the consumer?




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