Everything is good to go for your £12bn takeover, watchdog tells BT

The Competition and Markets Authority had already provisionally cleared BT’s £12.5 billion takeover of EE — a decision that generated a furious reaction from rivals such as TalkTalk and Vodafone — and yesterday, as expected, the watchdog concluded that after a “complex, detailed and rigorous” ten-month assessment, it believed that neither mobile nor broadband customers would lose out as a result of the merger, reports The Times.

Significantly, the deal, which will close by the end of the month, hands Deutsche Telekom a 12 per cent stake and a seat on the board of Britain’s former telecoms monopoly. Europe’s biggest telecoms operator, which had owned half of EE, said that it would be an active participant in the integration of the two companies.

Deutsche Telekom has launched combined fixed-mobile packages under the Magenta brand in its home market and eastern Europe and has three million customers.

Analysts believe that the foothold is part of a longer-term strategy that will end with the German company buying the British business. One leading industry source said he believed that the Germans would be “relentless” in their attempts to take over BT.

Peter Cochrane, a former BT chief technology officer, said that mergers between the leading players looked inevitable. “Within the decade I predict we are likely to see an acquisition of BT itself by Deutsche Telekom,” he said.

Though consumer groups questioned whether the BT-EE tie-up would be bad for customers. John Wotton, who chaired the CMA investigation into the deal, said that it would be “unlikely” to have a significant effect on competition, as BT was a small player in mobile and EE had only a modest footprint in broadband.

The CMA also dismissed concerns about BT’s ability to clamp down on its new rivals in the mobile market because of its control of infrastructure such as the fibre lines that run to mobile phone masts. It also was not convinced that BT would have the power to elbow out rivals that piggyback on the EE network, notably Virgin Mobile.

The CMA ruling is the first of three big regulatory decisions this year that will shape the sector. Ofcom is set to publish the findings of its review next month that could recommend that BT and its Openreach infrastructure unit are split to boost competition. Meanwhile, European regulators are ruling on Three’s takeover of larger rival O2.

TalkTalk was the most vociferous in its criticism of the CMA ruling, saying BT was now more powerful than when it was privatised more than 30 years ago. It said that BT would control 40 per cent of the telecoms market while Three, if its O2 deal was cleared, would have 40 per cent of the mobile market.

BT shares dipped 1¾p to 465¼p.