THE announcement by BT that it has agreed terms for a £12.5 billion cash-and-shares take-over of EE, Britain’s largest mobile operator, raises the prospect of cheaper deals for consumers.
Simplifying the network so that high-speed fibre and mobile 4G technology fuse seamlessly would suggest cost-savings that might be passed on.
At least that has partially happened in some other countries. But there is a caveat. Bundling telecoms products to be sold together – the logic behind the takeover – also tends to make it fuzzier for customers to compare prices.
BT could be selling landline telephone, mobile phone, broadband and television services (particularly its exponentially burgeoning TV football offering) to the same customer.
That’s a lot of small print to read in not the most intelligible sector, with a plethora of shouty offerings. There have been regulatory investigations of price “bundling” in other areas, notably the fund management industry.
But whether telecoms customers ultimately benefit or not, it looks a clear-headed strategy on BT’s part. The group expects costcutting and economies of scale alone to shake £360 million in synergies out of the takeover of EE, and puts the former state-owned giant back in the mobiles game with a bang 14 years after it exited via the spin-off of its old Cellnet business.
It also opens the way for more co-operation between BT and EE’s current owners, Orange and Deutsche Telekom, with the Germans getting board representation at the British telecoms giant via the transaction.
New products and services are likely to flow from the deal. I also doubt the takeover will be derailed by the Competition and Markets Authority.
As BT was not already a mobiles player, there is no lessening of the playing field. Three-owner Hutchison Whampoa, not BT, will be the new market leader here if its bid to buy rival O2, the old BT Cellnet business, goes through.
Sky has announced plans for its own mobile offering, wary of BT stealing a complete march on it; Vodafone, the other main mobiles player, is to offer broadband services in the UK, going down the same route of multiple offerings.
Things are hotting up, and maybe the consumer will benefit after all.