BT’s completion of the £12.5 billion acquisition of the UK’s largest mobile operator, EE, is just stage one of a potentially dramatic remaking of the UK market during 2016.
While the Competition and Markets Authority (CMA) waved through the BT-EE deal without demanding any major remedies, the UK fixed incumbent must still face further scrutiny from Ofcom.
The UK telecoms regulator is looking into rivals’ demands that BT’s local access unit, Openreach, should be spun off from its parent. The unit currently operates at an arms’ length but BT’s competitors want it to be a standalone business. They claim such a move would invigorate broadband competition in the UK.
Meanwhile, CK Hutchison and Telefonica currently await what conditions the European Commission (EC) will set for any merger of the two companies’ own UK operations, a move that would reduce the number of operators from four to three.
The EC was expected to publish its remedies this week and its failure to do so tends to suggest some intense negotiations are going on with interested parties.
Any approval by the commission would likely lead to Hutchison-Telefonica having to spin off infrastructure to a competitor. Sky and Virgin Media are obvious names in the frame but, more dramatically, arch-disruptor Xavier Niel was this week tagged as a potential entrant to the UK.
If all these developments took place then the UK’s telecoms market, both mobile and fixed, would have been dramatically altered in a relatively short space of time.
As well as entrants, there are those heading for the exit, including Orange, which today confirmed it has completed the sale of its 50 per cent stake in EE to BT (Deutsche Telekom is the other EE shareholder).
The French operator said it received an interim dividend of £60.5 million in Q3 2015 from EE and a final dividend of £131.5 million on 25 January 2016. Orange has received a total of £3.44 billion in cash and a 4 per cent stake in the enlarged BT Group.