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BT O2 merger: Five things you need to know

BT O2 merger: Five things you need to know

BT sold the company that would become O2 in 2001, spinning off the division then known as Cellnet to pay off a raft of debt.

But now the telecoms giant is back for a second bite of the cherry, confirming it is in talks with O2’s parent company Telefonica about a possible deal that would see the mobile network become part of its business.

So, what exactly does this mean? Will consumers be affected? And how long will it be before this is all given the green light?

Read on and we’ll tell you five things you need to know about BT’s potential O2 merger.

1 It’s early days

contract handshake

By no means is this a done deal.

BT said in a statement: “All discussions are at a highly preliminary stage and there can be no certainty that any transaction will occur.

A further announcement will be made if and when appropriate."

O2 owner Telefonica is yet to offer comment.

2 Who gets what?

O2 news

According to Spanish reports, Telefonica would get a 20% stake in BT’s business if it hands O2 over.

That would make the company worth around £10 billion, much less than the £17 billion it paid for it in 2005.

The reason for the price drop?

Telefonica no longer owns the O2 Germany business that came as part of that original package.

3 Will this affect BT’s 4G plans?

4g generic

Not at all. BT recently announced a deal with EE to use its 4G network as part of a new MVNO offering, launching in 2015.

That will form part of BT’s so–called ‘quad–play’ package, giving customers mobile, TV, broadband and landline for one monthly payment.

TalkTalk is plotting a similar tie–in with O2, while Sky is working with Vodafone.

Any merger with O2 would be well after BT launches its network in the New Year.

4 But there’s more...

EE news

It’s not just O2 that’s involved.

BT has said that it’s speaking with another network, believed to be EE, about a deal too.

This would make sense seeing as the two already have an MVNO agreement and would give it a stronger 4G offering than if it bought O2.

EE’s pre-eminence in super fast LTE in the UK has grown thanks to it being the first to offer such services in 2012, coupled with an impressive rollout of faster data speeds across the country.

5 Will this affect bills?

contract generic

It’s too early to look at any specifics.

But quad–play should mean cheaper 4G will be a reality for many consumers, as long as they lock all of their entertainment needs down with one supplier.

If BT buys out EE or O2, expect better deals on mobile contracts and perhaps even more access to sports, including the Premier League.

BT’s desperation to see off Sky as the UK’s number-one communications and media company knows no bounds, and price drops will doubtless be a way of enticing new customers.

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