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BT is in discussions to buy EE

by Mark Tyson on 26 November 2014, 15:05

Tags: British Telecom (LON:BT.A), O2/Telefonica (NYSE:TEF), Orange (NYSE:FTE), Everything Everywhere, PC

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If there was any doubt that British Telecom wanted to get back into the mobile business it should now be clear. Today Deutsche Telekom and Orange have confirmed they are in discussions with BT with a view to selling off mobile operator EE.

Earlier in the week we heard how BT was in talks with Telefonica about the possibilities and options of buying back O2. These early rumours were made clearer by a Spanish report which cited Telefonica's Group CEO, José María Álvarez Pallete. Apparently BT and Telefonica should get together to fight off "the attempted invasion of American giants," such as AT&T, according to Álvarez. Furthermore it was confirmed that talks between the two parties were "advanced, but have not yet reached any final agreement".

Now, interestingly, we see this news from the owners of the UK's EE mobile network. The statement by EE owners Deutsche Telekom and Orange is rather brief. The two EE owners say that they regularly consider EE's market position, and how to strengthen it, and strategic options to improve shareholder value. We are told that as part of these activities the companies are "having highly preliminary exploratory discussions with British Telecom". They add that any discussions are in an early stage and if they go any further announcements will be made at the appropriate times.

EE is the clear leader in 4G connectivity in the UK and holds 33.8 per cent of the UK mobile market. It would cost BT around £10 billion, according to Reuters. Meanwhile choosing O2 would instantly net BT 26.2 per cent of the UK mobile market and shave the company's outlay to £9 billion. It will be very interesting to see which way this goes…



HEXUS Forums :: 20 Comments

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Oh no - AT&T or BT getting involved in mobile would be bad news for customers. BT are always overpriced and AT&T are famous for locking down phones in the US so they can't be used on other networks. Competition for mobile contracts is bad and getting worse at the moment* - these sort of acquisitions will only make it worse….

(For example - I use to in the past get a phone with 2 year contract for roughly the value of the phone (spread over 2 years) - These sort of deals don't exist anymore - Its usually a £10 extra)
Was more surprised they sold the mobile side tbh. Everyone knew how big it was going to be in the future…
Apparently it's a strategic move as they think most of their market want combined fixed line, mobile, TV and broadband packages from one supplier. As such BT needs a mobile business to shackle to the rest of its retail offering. It may actually increase competition in the marketplace and lead to lower price profiles.

Can't say that I'm part of that market profile, though - never too keen to put all my eggs in one basket!
If BT manage to grab one of them you can be sure that Sky will try to get the other for parity as Virgin & TalkTalk both have quad play packages already.
cheesemp
Oh no - AT&T or BT getting involved in mobile would be bad news for customers. BT are always overpriced and AT&T are famous for locking down phones in the US so they can't be used on other networks. Competition for mobile contracts is bad and getting worse at the moment* - these sort of acquisitions will only make it worse….

(For example - I use to in the past get a phone with 2 year contract for roughly the value of the phone (spread over 2 years) - These sort of deals don't exist anymore - Its usually a £10 extra)
Definitely agree that having Aggravation, Trouble & Torment would be a bad idea for the UK market - the big US players would probably try the same setup as the States which just wouldn't work. Although, IS AT&T actually looking to get into the UK market? If so, then I'd kind of argue that they would make a better match for EE than BT.

Don't agree however that mobile contract competition is bad at the moment. For bundled contracts (service+mobile) you're undoubted correct, with prices going up and deal terms getting worse (at least at EE they are!). However, if you're looking at SIM-only deals then it's still pretty cut-throat. A wee while ago I moved from a Virgin “unlimited everything” 3G deal to a Three “all-you-can-eat” data package on 4G and it only cost me £3 extra/month, and that's a reasonable deal in my book considering Three offer EU/US data roaming and tethering.

Also going to agree wholeheartedly with the article author - definitely makes more sense for BT to pick up O2, (or rather should that be “recover O2”?) rather than looking at EE. From what I'm hearing the merger of T-Mo and Orange to form EE did them no favours at all, and they don't exactly have a stellar reputation for either customer service nor consistency of network.

Actually the latter is one of the drivers why I left Virgin (EE MVNO), Three is a lot more consistent in it's data rates.