LONDON -- The U.K.'s telecom landscape is about to go through a seismic change over the next 12 months with two mega mergers set to happen. And the first of those has taken a step closer to completion with approval from the competition authority.
BT Group, the U.K.'s leading broadband and fixed-line provider, has tabled a bid worth 12.5 billion pounds ($19.1 billion) for EE, the nation's biggest mobile phone operator and, on Wednesday, the Competition and Markets Authority (CMA) gave its provisional approval for the deal, stating the deal "is not expected to result in a substantial lessening of competition (SLC) in any market in the U.K."
BT's shares have risen over 3 percent on the London Stock Exchange Wednesday as a result of the news.
The deal would allow BT to offer customers so-called quad-play packages of TV, fixed-line phone, broadband and mobile, which competitors like Virgin Media and TalkTalk already do. The approval, albeit provisional, is expected to anger competitors who see the deal allowing for the creation of a dominant player across all telecoms sectors.
Vodafone UK told International Business Times in an email that overall it was "disappointed" with the CMA's initial findings.
"Although we agree with the CMA’s finding that the UK wholesale mobile market is and will remain very competitive, we strongly believe the combination of the UK’s dominant supplier of digital fixed infrastructure, upon which all other providers rely, with the largest mobile operator would have a negative impact on the market and the services available to millions of UK consumers and businesses," a Vodafone spokesperson said.
John Wotton, chair of the CMA inquiry, disagreed with Vodafone's conclusions: "As BT is a smaller operator in mobile, it is unlikely that the merger will have a significant effect on competition. By the same token, it is unlikely that the merger will have a significant effect on competition in the retail broadband market, where EE is only a minor player," he wrote in his comments in the report.
However the four main mobile providers could soon become three as O2 has agreed to sell its U.K. operations to Hutchison Whampoa for 10.25 billion pounds ($15.69 billion). Hutchison already owns and operates the Three network in the U.K., and many analysts expect that deal to struggle to win regulatory approval.
The CMA provisional approval is just one hurdle the BT-EE deal has to clear before being given the final green light, with BT also dealing with telecom watchdog Ofcom in relation to the potential splitting of its fiber network known as Openreach from its core business. BT is currently required to give equal access to the nationwide Openreach fiber network to its competitors, but some have voiced concerns that this is not happening.
Unsurprisingly BT has welcomed the CMA's decision, with CEO Gavin Patterson saying: “We’re pleased that the CMA has provisionally approved BT’s acquisition of EE. The combined BT and EE will be good for the U.K., providing investment and ensuring consumers and businesses can benefit from further innovation in a highly competitive market.”