The U.K. is set to see a seismic change in its telecommunications landscape in the next month as the largest broadband provider in the country buys the country's largest mobile operator in a controversial deal that many claim will weaken competition and result in higher prices for consumers.
On Friday morning, the Competition and Markets Authority (CMA) published its final approval for the purchase of mobile operator EE by BT Group, the U.K.'s leading broadband and fixed-line provider in a deal worth 12.5 billion pounds ($18 billion). The deal will create the largest telecoms company in the country, which will be able to provide broadband, fixed line, mobile and TV in a single package.
The CMA's final report comes three months after it published preliminary findings, but the response to those findings have not seen it change its viewpoint. "Since our provisional findings, we have taken extra time to consider responses in detail but the evidence does not show that this merger is likely to cause significant harm to competition or the interests of consumers," John Wotton, the inquiry chair said in the report.
Following approval from the CMA, the merger is set to be finalized in early February. The BT-EE deal is one of two huge deals in the U.K. telecoms market set to go ahead in 2016 with the other seeing Telefonica agreeing to sell its U.K. operations (O2) to Hutchison Whampoa for 10.25 billion pounds ($14.7 billion). Hutchison already owns and operates the Three network in the U.K., but many analysts expect that deal to struggle to win regulatory approval with the European Commission investigating the deal.
Criticism of the deal has come from a number of areas, but particularly from those companies directly affected by the deal, including Sky, TalkTalk, O2, Vodafone and Virgin Media, all of whom responded to the provisional findings of the CMA with objections.
Commenting on the final decision published Friday, Dan Howdle, telecoms expert at consumer mobile and broadband advice site Cable.co.uk said the biggest worry for companies like Virgin Media -- which operates on EE's mobile network -- is that the deal will see BT-EE closing its doors to third-party operators in an attempt to monopolize its own network infrastructure.
"The greatest concern for its competitors, then, is that, though unlikely –- as the CMA points out –- no firm measure has been put in place to actively prevent it [closing its doors to third parties."
As well as objections from competitors, the deal is seen by many as a poor move for consumers who will now have even less choice in the telecoms marketplace with Mark Windle, head of marketing at telecoms company OpenCloud, pointing out that in some European markets, consolidation of this kind "can result in less innovation in communication services, due to lack of operator competition."
Windle adds that "this could be bad for subscribers, who for years to come could continue receiving the same-old vanilla services -- the operator itself could just become a bit-pipe for the innovation of third party apps."