U.K. Watchdog Provisionally Clears BT's Buy of EE -- Update
October 28 2015 - 8:55AM
Dow Jones News
By Simon Zekaria and Rory Gallivan
LONDON--The U.K.'s antitrust watchdog has provisionally cleared
BT Group PLC's (BT.A.LN) proposed multibillion-dollar acquisition
of mobile operator EE without demanding any concessions, providing
a fillip for the British telecom group's efforts to bolster its
position in its home market.
The Competition and Markets Authority, which fast-tracked the
deal for further in-depth investigation, said on Wednesday that the
merger is "not expected to result in a substantial lessening of
competition in any market in the U.K."
Last February, BT agreed to acquire EE from its owners Deutsche
Telekom AG (DTE.XE) of Germany and France's Orange SA (ORA.FR) for
GBP12.5 billion ($19.1 billion).
The deal marries the U.K.'s largest fixed-line telecom operator
and the country's biggest mobile operator. The combination would
allow BT to bundle fixed-line, mobile, broadband and television
services.
European telecoms operators have been looking to push though
deals that join up telecom and media services, seen as boosting
subscriber revenue and increasing customer loyalty. The takeover
gives BT more than 30 million EE customers, of which 24.5 million
are direct mobile customers and 834,000 are broadband customers, as
well as 580 retail stores and about 15,000 new employees.
John Wotton, who chaired the inquiry, highlighted that the two
companies largely compete in separate areas.
"We provisionally think that the retail mobile market in the
U.K., with four main mobile providers and a substantial number of
smaller operators, is competitive, Mr. Wotton said. BT is a
relatively minor player in the U.K. mobile sector, EE has little
share of the broadband market, while the combined company wouldn't
have an unfair advantage in wholesale markets, he said.
The CMA will publish its final report in January next year.
"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, BT Chief
Executive Gavin Patterson said in a statement.
"The announcement that no remedies will be applied represents a
particular victory for [BT]," said CSS Insight analyst Kester Mann.
Rivals such as Sky PLC (SKY.LN), Vodafone Group PLC (VOD.LN) and
TalkTalk Telecom Group TALK.LN) have repeatedly expressed concern
over the dominant position of a combined BT/EE, Mr. Mann said.
"We are concerned by the CMA's provisional clearance of the
proposed merger between BT and EE," said a spokesman for
TalkTalk.
Ofcom, the U.K.'s communications regulator, is independently
reviewing the role of Openreach--BT's infrastructure division--as
part of its digital communications review. BT's rivals have called
for Openreach to be separated off on competition grounds though BT
says the group's structure is vital for investing in the
network.
At 1142 GMT, BT shares rose 3.1% to 466 pence, valuing the
company at 37.8 billion pounds ($57.8 billion).
-Write to Simon Zekaria at simon.zekaria@wsj.com. Rory Gallivan
at rory.gallivan@wsj.com;
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 28, 2015 08:40 ET (12:40 GMT)
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