BT to put case for EE acquisition to regulators

BT is preparing to submit the £12.5bn acquisition of the UK's largest mobile operator to competition authorities as early as this week, firing the starting gun on a deep analysis of the market position of the British telecoms company.

The group will hand in hundreds of pages of documentation arguing that the industry and consumer benefits from the combination of the UK's largest mobile and fixed networks. It will also address concerns expected to be highlighted by rivals about the threat of its strong position in the telecoms industry.

BT was given the go-ahead for the acquisition of EE by its shareholders last week, with more than 99 per cent voting in favour of the deal at an investor meeting held in London.

The filing of the documents with the Competition and Markets Authority will start a lengthy process to analyse potential antitrust issues caused by the acquisition. When it is filed, the proposed deal will be the largest competition case put before the CMA to date.

The process is expected to take the rest of the year, even if regulators are convinced by BT that only a first phase investigation is needed. A longer, second phase would take the process into next year. BT may need to offer concessions to win approval from the CMA.

BT's submission focuses on several key areas, according to one informed person. The group will aim to show that the acquisition will not significantly add to its share of either the mobile or broadband market since there is little overlap between the two businesses. Following the deal, BT will have a 32 per cent share of the mobile and fixed telecoms market.

The two businesses combined would own more than 40 per cent of the spectrum needed for mobile services. This is more than allowed under current rules, but Ofcom is expected to make changes that would relax the regime next year.

The CMA has already done preparatory work on the acquisition of EE, with questionnaires sent out over recent weeks asking companies in the sector about their views on ownership of spectrum holdings and fixed line network provision by BT.

Rivals such as TalkTalk and Sky are expected to use the process to call for the formal split of BT's networks arm, Openreach, which provides much of their broadband services on the same terms as those for BT's consumer arm. Vodafone, meanwhile, is expected to argue for more control over access to BT's fixed broadband network.

BT is set to address the future of Openreach in its arguments to the CMA, according to one person familiar with the situation. The company is expected to say that the division is already highly regulated enough to provide a fair and equal service to BT and its competitors.

It will also seek to show how EE has already encouraged competition in the mobile market by selling access to its network for rival brands, including Virgin Media.

This week the group is expected to reveal further growth in profitability and revenue at its consumer arm in the fourth quarter results, boosted by more customers taking its bundles of home broadband and TV packages.

BT began selling its own mobile services for the first time in the last quarter. The group is expected to reveal an increase in its dividend of between 10 per cent and 15 per cent for the full year.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation