BT, British Telecom, have an interesting history with the UK’s mobile phone industry. At one time, they were part owners of Cellnet, which was for a long time the UK’s second largest cellular network. Without going into the details, Cellnet became BT Cellnet, then MMO2, then O2 and is itself shortly about to be owned by Three’s parent. After selling on BT Cellnet, BT did not have a mobile operator in the United Kingdom and have instead concentrated on being the major fixed line provider, although BT have had a branded service on and off through the years. However, recently they decided that they wished to dip a toe back into the business and had originally formed a deal with UK carrier EE to provide the LTE and 3G component of their own network, which was to have a bias towards using BT Wi-Fi hotspots. It seems that somebody in BT decided that rather than simply use EE’s services, they may as well buy the company and after announcing a £12.5 billion deal, everything was bundled up and sent to the UK’s competition authority for consideration. We are now approaching the date when the deal is expected to be rubber-stamped, which is Monday.
The competition watchdog provisionally gave the acquisition the green light back in October and is expected to confirm this next week. The deal was originally announced in late 2014 and BT has had to overcome several regulatory hurdles since then. However, the UK’s Competition and Mergers Authority (CMA) has already stated that “it did not consider that the proposed merger would “have a significant effect on competition” despite objections raised by BT / EE’s competitors. One of these objections is that BT’s infrastructure business, Openreach, already provides much of the backhaul capacity for the existing mobile telecommunications market in the UK and should BT own both EE and Openreach, this could give EE an unfair advantage. We have seen calls for Openreach to be split from BT.
Another issue is how BT combined with EE will own most of the UK’s spectrum, and EE currently offer wholesale capacity to the other carriers. It is unclear if the Competition Authority will insist that BT sells on some of its combined spectrum to improve competition in the market. We will know more in a few days.