The UK’s Competition and Markets Authority (CMA) started the ball rolling in its examination of BT’s £12.5 billion takeover of EE, the largest mobile operator in the UK, by requesting opinions from competitors about what impact a BT-EE entity might have on the mobile and broadband markets.
According to a letter seen by the Financial Times (FT), the CMA highlighted several areas that could suffer a “potential impact” from an emboldened BT, which would be number one – in terms of subscribers – in both the UK’s broadband and LTE markets. Those areas include wholesale (mobile backhaul) and retail (mobile, fixed voice, broadband, as well as bundled services, such as triple- and quad-play).
The CMA sent letters to all interested parties asking for their input, with responses – according to the FT – expected later this week.
Vodafone, said the UK newspaper, is expected to hone in on the terms of wholesale access to BT’s fibre network.
The concern is that following a tie up with BT, EE would be the only UK mobile network operator not reliant to some extent on a third party for backhaul, which could lead to an unlevel playing field.
“When BT was giving us all the same sort of service without being in the game, that was OK,” said one rival executive, quoted by the FT. “But it will own the largest mobile group and will in effect be paying itself for access to its mobile backhaul.”
BT CEO Gavin Patterson strenuously denies competitors would be disadvantaged. In a call with analysts following its agreement with EE, Patterson said Openreach – the BT arm that strikes wholesale deals – was “very tightly regulated, and it will continue to serve all service providers in exactly the same way after this transaction in the same way it does today”. He claimed there would be “no inherent advantage”.
The “preliminary invitation to comment” request by the CMA comes before the full merger inquiry into the deal, which will be the largest of its kind ever handled by the UK competition watchdog.
The FT noted that after the acquisition of EE, the combined BT group would have a 31 per cent share of consumer mobile subscribers, and about 35 per cent of subscribers in consumer broadband.