As the BT choose to buy the UK’s most popular network we look at the implications of the acquisition on the market…
What now for O2 and the rest?
The implications of BT’s decision to pursue the purchase of EE will be most keenly felt by O2; EE’s main rivals to be taken over by the media giant. What the Telefonica owned operator does now will be interesting to see, it seems likely that it may still be bought, with Three’s owners Hutchinson Whampoa suspected to hold an interest. Pressure also increases on Vodafone to take action and increase the speed of any potential acquisitions it may have lined up.
Was 4G the key?
When Mobile first examined the pros and cons of BT buying either EE or O2 the one area where EE couldn’t be touched was on infrastructure. BT specifically mentioned 4G when it described the assets it found most attractive at EE. In an area where differentiation can be difficult to achieve there’s no doubt that coverage is crucial.
There is also room for progress when it comes to coverage; when the prospect of a BT MVNO was floated there was the suggestion that BT would leverage its Wi-Fi FON network alongside EE’s 4G offering. Were a deal to be agreed this combination could become a reality. The coverage the two could offer on this basis alongside new technologies such as Wi-Fi calling would blow any competitor out the water.
Eye watering financials
Some would argue that rumoured £12.5bn price tag represents good value for a market leading network, but the figure is massive. Even a firm of BT’s wealth is taking a risk with such a big investment. Margins for mobile operators are notoriously thin so the idea that BT will suddenly be plugging into a major revenue stream is a false one. Considering BT has failed to seriously monetise other aspects of its business such as sporting rights as of yet, it will be fascinating to see what its plan to make money from EE is.
The big get bigger
Both companies are huge players in the UK telecommunications industry, the combination of the two creates a potentially market dominating force. Although this creates greater number of complications. The two firm’s rivals will no doubt complain to the various regulatory bodies about the threats it poses to competition.
There is no doubt that O2 was the easier purchase, but BT clearly believes easiest doesn’t mean best. Buying into a new market there is rarely the opportunity to choose a firm in a leading position. BT did have that choice and they took it.
Absorbing the brand
As nice a story as it was the thought that O2 would be returning home after a number of years with a foreign owner. The O2 brand has far more of a legacy compared to the relatively new EE name. Absorbing the organisation into itself may be difficult, but reworking the EE brand should be a far easier task.