BT’s plans to buy either O2 or EE will cause seismic shifts in the UK’s mobile market, analysts predicted today.
Following news that BT is in preliminary talks with O2 and running the rule over another UK network, widely believed to be EE, analysts said any deal could trigger major market consolidation.
'If BT buys EE it will leave O2 in an even more weakened state than it is already in,’ said Phil Kendall, senior network analyst at Strategy Analytics. He added: ‘It will be a bigger blow for O2 to be left behind than it would be for EE which is in a much stronger position in its market. EE’s strategy still plays out if BT chooses O2 but how will O2 compete with four or five quadplay brands in the market? This will drive further consolidation.’
Dario Talmesio, principal analyst at Ovum, said any deal between BT and EE or O2 will have serious implications for Vodafone. ‘Any sale of either EE or O2 to BT will have much wider repercussions in the market. For a start, Vodafone needs to do something. Although it has said it has plans to enter the quad play market via its own deployment, this may not be enough.
'A deal by BT with either operators may re-energise Vodafone's negotiations with TalkTalk, although Vodafone may still wait for the value of TalkTalk to come down, which could happen over the next year, as competition increases in the quadplay market.’
CCS Insight analyst Kester Mann said a BT acquisition of a mobile network would also raise competition in the retail space with BT returning to the high street. He added: ‘ Its lack of presence right now is an important weakness given that articulating the merits of a multi-play strategy are best done at point-of-sale.’
BT confirmed today that it is in ‘preliminary talks’ with Telefonica over the sale of O2 UK to BT and has been approached by another operator to acquire its UK business.
The O2 deal could see Telefonica take a 20% stake in BT in return for their UK arms, according to reports from Spain.
In a statement BT said: 'We have received expressions of interest from shareholders in two UK mobile network operators, of which one is O2, about a possible transaction in which BT would acquire their UK mobile business. All discussions are at a highly preliminary stage and there can be no certainty that any transaction will occur.'