BT set out to convince regulators to pass its £12.5bn merger with mobile operator EE on Wednesday, claiming the deal will create a digital champion for the UK.
The nation’s biggest telecoms company said that swallowing the UK’s largest mobile network will not be bad for consumers, as rivals warned a lessening of competition could lead to price increases.
BT boss Gavin Patterson said rivals could use the combined group’s broadband and mobile phone networks to launch their own services. He said: “The deal will create a UK digital champion, one that can help the country stay ahead of its peers … to deliver the UK’s connected future but also one that others can piggy back on if they don’t have the appetite to make the investments themselves.
“Hundreds of companies use our network on equal terms and they will continue to do so in the future. We are happy for them to stand on our shoulders.”
The Competition and Markets Authorities is expected to decide by early next year whether to allow the merger to go ahead, and whether to impose remedies. These could include forcing the group to sell mobile spectrum, imposing wholesale price caps, and demands to allow a certain number of virtual mobile networks to piggy back on its masts. EE already supports 29 virtual networks, including Asda Mobile.
Sharing a platform with Patterson during a press conference held at the top of BT Tower in central London, EE chief executive Olaf Swantee said the deal that had created his company – a merger between Orange and T-Mobile – had produced benefits for consumers. EE was the first of the four mobile operators to launch a 4G network in the UK, and its service remains the fastest and largest geographically.
“Consolidation has proven it can unlock investment,” said Swantee. “We brought the UK from laggard to leader in a short space of time. Angola and Azerbaijan at the time had 4G and the UK did not. Today the UK has the fastest speeds in Europe.”
BT says it would control one third of the mobile market, and one third of fixed-line home broadband business in the UK – adding a small 3% from EE to its existing 31%. A 40% share of any market is often a trigger for regulators to intervene.
By cutting the numbers a different way, rival pay TV and telecoms group TalkTalk estimates BT plus EE will have 40% of revenues for fixed and mobile services sold to consumers, and 70% of the wholesale market – BT already boasts of being the largest wholesaler of telecoms in Europe.
TalkTalk said Wednesday: “Quite simply, consolidation leads to reduced competition and a reduced incentive to innovate and, crucially, higher prices … we need to scrutinise merger activity in the UK market to ensure that we do not wave through any deal that would mean businesses and consumers lose out”.