Following BT’s announcement (see below) it will acquire EE, the UK’s largest network, it seems that more moves in the telecom industry are poised. Telefónica, which owns O2, has confirmed it has entered into an exclusivity agreement worth £10.25bn with Hutchison Whampoa, owner of Three. That’s less than BT’s £12.5bn buyout of EE, but the firm has more customers and a larger 4G infrastructure. “This operation marks another step in Telefónica’s transformation process, initiated by the Company to become a leading digital telco and accelerate sustainable long-term growth, while maintaining an attractive remuneration policy,” a statement from the company said. Despite EE having more customers, the Three/ O2 merger will make it the biggest UK network with a market share of 41 percent “The agreement is a win-win for both companies, which were looking increasingly vulnerable as pure-play mobile operators in a market rapidly transitioning towards multi-play,” said Kester Mann, principal analyst at CCS Insight. The UK’s mobile network market is being shaken up and this will signal the end of various ongoing deals such as Three sharing EE’s network. BT was initially eyeing up O2 as a potential deal in 2014, but EE then entered the frame so the firm had the pick of the two. EE might have been a better deal for Three since with an existing network sharing deal in place, and the same with BT and O2, but it looks like that wasn’t enough to swing it. Hutchison Whampoa has a history with O2 though, as it purchased O2 Ireland back in 2013. One of the big questions is what is happening to competition in the UK telecoms market. If this deal goes through, four out of five successful bidders in the 4G spectrum auction will have merged. Ofcom effectively guaranteed Three 4G spectrum in fear of reducing the number of operators. There are a number of other operators such as Tesco Mobile, GiffGaff, Virgin Mobile and others, but they run virtual networks, so deals could well change with the acquisitions.
After much speculation, BT has confirmed that it is in negotiations with Deutsche Telekom and Orange with the aim of acquiring EE and its 24.5 million customers for a price of £12.5bn. In a statement, BT said: “The proposed acquisition would enable BT to accelerate its existing mobility strategy whereby customers will benefit from innovative, seamless services that combine the power of fibre broadband, Wi-Fi and 4G. BT would own the UK’s most advanced 4G network, giving it greater control in terms of future investment and product innovation.” EE customers are likely to experience more change as it’s likely that BT will put an end to EE broadband and EE TV services since they are rivals to its own products – Infinity and YouView. The move means BT can compete with Virgin Media as a ‘quad-play’ provider by offering broadband, mobile, landline and TV in one bundle.
Existing BT and EE customers are likely to be offered discounts and deals to take all four. BT hasn’t announced what it plans to do on the mobile side of things and it will be a difficult decision whether to ditch the EE brand which the company has spent a lot of money building, including the tie-in with Kevin Bacon. We wouldn’t be surprised to see BT Mobile becoming the new name eventually, though.
0 Comments