15th January 2016
BT has been given the go-ahead for a takeover of mobile phone company EE, creating a telecoms giant.
The deal will mean the company will grow to mammoth proportions and will provide mobile, broadband, TV and phone lines to 35 million customers.
The size of the company could also see customers’ bills reduced as better ‘quad play’ deals are introduced that combine mobile, broadband, TV and phone line rental.
The deal was announced almost a year ago but the Competition and Markets Authority (CMA), the competition watchdog, has spent a long time scrutinizing the deal to ensure it is good for customers.
There were fears that the development of a large telecoms company would give it too much power in the market and increase bills, especially as another merger between O2 and Three is also planned.
However, the deal has now been given the green light as John Wotton, who chaired the inquiry, said the inquiry ‘does not show that this merger is likely to cause significant harm to competition of the interests of consumers’.
In fact, bills could become better value as BT will now be able to add mobile tariffs into its deal, whereas previously it could only offer broadband, TV and landline phones.
Wotton said the merger would not cause any detriment to competition in the telecoms sector.
‘The retail mobile services market in the UK is competitive, with four main mobile providers and a substantial number of smaller operators,’ he said.
‘As BT is a smaller operator in mobile, it is unlikely that the merger will have a significant effect. Similarly, EE is only a minor player in retail broadband, so again it is unlikely that the merger will have a significant effect in this market.’
However, another review by Ofcom into the telecoms sector and how it is regulated may be more concerned by competition as a wider sector issue.
BT chief executive Gavin Patterson said: ‘We are pleased they (CMA) have found there to be no significant lessening of competition following an in-depth investigation lasting more than ten months.
‘The combined BT and EE will be a digital champion for the UK, providing high levels of investment and driving innovation in a highly competitive market.
‘I have no doubt that consumers, businesses and communities will benefit as we combine the power of fibre broadband with the convenience of leading edge mobile services. I look forward to welcoming EE into the BT family.’
Consumer champion Which? said both BT and EE would have to consider their customer service records in the merger as neither has fared well in this respect.
Which? executive director, Richard Lloyd, said: ‘Fewer players in a market is rarely a good thing, but now this deal has been approved both companies must urgently address their abysmal customer service record.
‘The regulator will need to keep a very close eye on this to ensure consumers really do benefit from the deal and be prepared to step in if not.’