BT’s announcement that it has entered into exclusive negotiations to buy EE for £12.5 billion doesn’t come as a huge surprise.
After all, last month BT confirmed that it was in provisional talks with both EE and O2 about a possible deal, while Orange executives last week revealed there would be news about a potential merger before Christmas.
While BT has played its hand, there is still a long way to go before EE becomes part of its ever–growing communications and entertainment empire.
The company itself says that there is no guarantee that an agreement will be reached and although it’s said EE owners Deutsche Telekom and Orange will get a cut of its business, these are provisional plans.
Whatever happens, this is just the start of a series of power plays at the top of the mobile industry.
BT is just one of a number of companies looking to offer so–called ‘quad play’ services, selling mobile access alongside broadband, home phone and TV packages.
With its Premier League package and forthcoming Champions League deal, on top of its already strong position in the home phone market, it could offer very tempting deals to new and existing customers.
Vodafone is launching its own home broadband and TV network next year and is said to be looking at splashing out on Liberty Global’s European business, which includes Virgin Media’s cable service.
Such a tie up would represent strong competition to a BT/EE axis.
Even more intriguing is word that Three is looking to snatch O2, a move which would seem more likely seeing as BT has turned its attentions to EE instead.
A more unified mobile and home entertainment network could be a winner for consumers, offering cheaper all–in–one deals and reinvigorating the market in the process.
But the worry is that larger companies could squeeze out smaller competition. BT buying EE would give it a huge amount of power, perhaps more than any other media company in the country.
It’s unlikely that competition regulators will not choose to look closely at any kind of deal before it’s signed off.
Consumers can expect to see bills come down, but only if they choose to go all–in with one company.
That isn’t always the best bet, especially when contracts end at various times, meaning unifying services isn’t always straightforward.
Cheap SIM only deals and the death of the landline are also obstacles to convincing consumers to sign up.
Rural users, though, so long overlooked, may benefit as BT finally gets access to stronger networks in far off areas.
The BT/EE exclusivity period is set to last for ‘several weeks’.
By the time it’s up we may be well into a period of upheaval that the UK mobile industry hasn’t seen for years.