Telco rivals have lashed out furiously, after the UK’s competition watchdog waved through BT and EE’s £12.5bn merger, which was given the final green light early this morning.
The Competition and Markets Authority (CMA) said the takeover was unlikely to cause “significant harm to competition or the interests of consumers” as the UK mobile market is so competitive.
BT’s chief executive, Gavin Patterson, unsurprisingly welcomed the decision as “great news” – but the firm’s competitors see it differently, with TalkTalk warning the CMA was putting the UK’s “thriving, competitive” telco market at risk. He pointed to Ireland and Austria, where diminishing the number of providers from four to three has led to price increases of up to 25 per cent.
TalkTalk criticised the regulator for not taking the proposed Three-O2 merger into account when making its decision:
It is dangerous that the regulator has looked at this merger in isolation, given the unprecedented levels of consolidation taking place in the wider telecoms industry.
Vodafone’s chief executive Vittorio Colao has criticised the deal, warning the telco market was being “re-monopolised”.
BT and EE shook hands on the takeover in February last year, but before they could move forward on bringing together BT’s more than 10m retail customers and EE’s 24.5m mobile subscribers, it was the subject of a six-month competition probe. Having sailed through, the two will become one in March.
Dave Millett, analyst at telecoms brokerage Equinox, said it may seem as though we have lots of choice in the mobile market, but the opposite is in fact true. "There is nowhere near the number [of operators] that would create a genuinely competitive market”:
With landlines there are literally hundreds of companies you can go to in order to buy a phone line or broadband service.
Analysts are expecting the thumbs up from the CMA to impact the future of BT’s Openreach division, which controls the country’s broadband networks. Openreach is currently being investigated by telco watchdog Ofcom, as BT’s rivals have been arguing heatedly that the giant’s control over the network is a conflict of interests.
“We have every confidence that Ofcom will take this into account when considering the future structure of Openreach,” said a TalkTalk spokesperson.