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CMA passes takeover deal with no remedies; U.K. incumbent says it will complete 12.5 billion mobile operator buy on 29 January.
The U.K. competition watchdog on Friday gave the green light to BT’s planned acquisition of EE, paving the way for the U.K. incumbent to complete the deal before the end of the month.
The Competition and Markets Authority (CMA) said that after an in-depth investigation it concluded that the proposed deal would not have a significant impact on competition in any U.K. telecoms markets and therefore cleared it without applying remedies.
BT welcomed the decision and said it will begin the formal process of completing the acquisition. It plans to close the deal on 29 January, when EE parents Deutsche Telekom and Orange will receive their stakes in BT, as outlined under the terms of the transaction.
BT chief executive Gavin Patterson said he looks forward to "welcoming EE into the BT family." EE will operate as a distinct line of business under the BT umbrella and will be led by EE’s current chief commercial officer Marc Allera, who will replace Olaf Swantee as CEO once the deal closes.
"The combined BT and EE will be a digital champion for the U.K., providing high levels of investment and driving innovation in a highly competitive market," Patterson said.
"I have no doubt that consumers, businesses and communities will benefit as we combine the power of fibre broadband with the convenience of leading edge mobile services," he added.
But while BT can clearly see the benefits of the deal, which marks its full return to the mobile market almost 15 years after it spun off O2, there has been significant opposition from rival players, many of whom have been vocal about the threat it poses to the competitive landscape.
The CMA sided with BT though.
The £12.5 billion deal brings together the U.K.’s largest fixed telecoms business with its largest mobile telecoms business, but "is not expected to result in a substantial lessening of competition (SLC) in any market or markets in the U.K., including in relation to the supply of retail mobile, wholesale mobile, mobile backhaul, wholesale broadband and retail broadband services," it said on Friday.
The telcos operate mainly in separate areas with limited overlap, the CMA said.
"The retail mobile services market in the U.K. is competitive, with four main mobile providers and a substantial number of smaller operators," said John Wotton, chair of the CMA’s inquiry. "As BT is a smaller operator in mobile, it is unlikely that the merger will have a significant effect. Similarly, EE is only a minor player in retail broadband, so again it is unlikely that the merger will have a significant effect in this market," he said.
"We have also found that in supplying services such as backhaul, wholesale mobile or wholesale broadband services a combined BT/EE would not have both the ability and the incentive to disadvantage competitors such that there would be significant harm to competition," Wotton added.
Once the deal closes, Deutsche Telekom will take a 12% stake in the telco and will appoint a representative to its board "in due course", while Orange will hold 4%. The French telco noted that it will also get approximately £3.4 billion (€4.5 billion) in cash, subject to adjustments.
There has naturally been talk of closer ties between BT and Deutsche Telekom at a time when consolidation is rife in the European telco industry.
Last week, there were indications that the two companies aim to work together going forward, including possible strategic partnerships and media deals that would boost BT’s TV offering.
For now though, EE’s parent companies have simply said they are happy that the deal will go ahead.
"We look forward to supporting BT with relevant expertise to help generate the anticipated value growth of its integrated business model," said Deutsche Telekom CEO Tim Hoettges on Friday.
"The combination with BT is a very positive step forward for U.K. consumers who are set to benefit from convergent fixed-mobile services," said Stephane Richard, his counterpart at Orange. "We are very happy with today’s decision, which provides an important signal for telecoms operators across Europe that the sector is ready for fixed-mobile consolidation."
