BT’s acquisition of EE could be a sign of more dealmaking to come in Europe and the rest of the world, although the UK incumbent and its domestic market are different to elsewhere, said Gavin Patterson, BT CEO, at a Q&A session in London this morning.
“There is scope for consolidation in Europe” where over 400 operators are present and where he believes that “scale and the removal of complexities in the market structure” are imperative for investment, he said during IDATE’s DigiWorld Yearbook 2015 launch at the BT Centre.
“We are putting two units back together again” he said, referring to the time years ago when BT had mobile assets. “It was all about finding the right moment to come back together to create scale and meet the needs of the customers,” which, to a great extent, is data consumption.
BT is unique among tier-one European operators in not owning a mobile business.
Patterson also made it clear that if the EE acquisition goes through, the number of operators in the UK market will not change as a result of the deal. The number will remain four, which means competition will stay the same, he claimed. However, Hutchison Whampoa is separately in the process of buying O2, which would actually reduce the number to three.
He agreed that the market in the UK is more robust than the rest of Europe because of the high demand for internet related-services and the way in which the internet has been adopted by not just consumers and businesses but the government – it is very much at the “forefront of the economy” and he believes BT is fortunate to be operating in a market that “wants to buy”.
He also praised UK watchdog Ofcom for focusing regulation around the needs of the economy, creating a set of conditions that attracts investment and allows the market to innovate, thanks to which prices have remained amongst the lowest in the world, “significantly lower than the US” in fact.
“An awful lot has worked extremely well and we don’t need change for the sake of change,” he said, adding that he hopes Ofcom continues to remove bottlenecks and bureaucracy so that operators have a level playing field, which would “create an even more dynamic market”.
Speaking about the EU’s plans for a digital single market, he said it was imperative that a strategy that allows Europe to flourish and make it more competitive against the US, China and India should be priority.
“We must act as a single unit to create scale and consistency, ensuring conditions are right for consolidation but not reduce competition,” he said.
As for net neutrality he said “we are in a good place and we need to secure it, we need to enshrine certain aspects such as access and quality for everyone but not be in a position that the US in in danger of getting into,” which is to be completely regulated.
However, as far as content is concerned, Europe does not need a single market because that would hinder the optimisation of content regionally and market by market.
He also strongly believes the UK should remain in the EU, and act as a catalyst for change.
“Not being in the EU would be a risk to UK investment needed to keep growth going,” he said. “Investment may move away or stall If we are not part of the single market, we can’t benefit by being on the outside”.
If that were to happen, the UK would have to operate within Europe’s rules without having a say in how those rules were made.
“We should be in the EU as an agitator that is pro-market and that promotes competition,” he said.
Describing the Internet of Things market as having a “nebulous vision at the moment”, he said a definition of the term needs to crystallise around a few clear use cases.
BT does intend to play a role and has test markets in terms of its smart city programme, but Patterson admitted “we are not among the real innovators” at the moment and need to “sharpen our pencils” going forward.
“At heart, we are a retailer and we want to bring the best of applications and services” to our customers, he said.
Similarly when it comes to the cloud, he said that while some BT services leverage the cloud, “you can’t expect to do it all”.