BT agrees to buy EE for £12.5B

February 5, 2015 | 12:17

Tags: #4g #cellnet #mobile-broadband #mobile-network #orange #telefonica

Companies: #bt #ee #o2 #t-mobile

BT has announced that it is to pick up mobile operator EE, formerly Everything Everywhere, in a deal valued at an impressive £12.5 billion - marking the company's formal return to the mobile market it abandoned in 2002.

BT was a major player in the early days of the mobile communications market, launching a partnership with Securicor in 1985 under the name Cellnet. BT was so confident in the burgeoning market that it bought out its partner in 1999, but had an about-face in 2002 when the mobile business - now called O2 - was spun off into a separate company. BT would then officially exit the market entirely in 2005, selling O2 to the Spanish Telefónica for £18 billion. Since then, BT has concentrated on its traditional market of fixed-line telecommunications - a market which is steadily declining in the face of near-ubiquitous mobile phone ownership.

The new deal will see EE, formed from T-Mobile and Orange, becoming a wholly-owned BT subsidiary. BT will then become the largest provider of land-line, broadband, and 4G mobile connectivity in the country. A deal of this magnitude, however, is likely to draw considerable attention from monopoly regulators. 'The competition investigation is likely to focus on spectrum holdings and wholesale access for other mobile operators,' opined Ovum analyst Matthew Howett of the deal. 'At this point in time, things generally look promising and the green light is likely to be given, albeit with concessions needed.'

One of these concessions may be in reducing BT's allocation of 4G radiospectrum, which it acquired in 2013 at auction - despite not operating a 4G service of its own. Combined with EE's already-sizeable 4G allocations, the combined spectrum segment may be considered too large for one company to hold. Other concerns include guarantees that BT's wholesale backhaul products will be offered on a non-discriminatory basis, and that BT's EE subsidiary won't be given special discounts or priority agreements.

The deal is expected to close in early 2016.
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