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BT’s EE acquisition bid likely to face regulatory hurdles instigated by competitors

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BT has inked an exclusivity agreement with Deutsche Telekom and Orange for possible acquisition of Everything Everywhere (EE) pegged at around £12.5 billion on a debt/cash free basis, but the deal will most certainly face regulatory hurdles instigated by competitors.

First and foremost reason is the “backhaul” services that BT Wholesale provides to mobile operators. If BT does go ahead with the deal, it will raise concerns as it will be running its own mobile business through the “piping” that is also owns – something that gives it an edge over other competitors.

Competitors will most certainly voice their concerns in this regards and they will be demanding a guarantee with regulatory backing that wholesale products currently being offered by BT will continue to be offered on a non-discriminatory basis.

Further, if the deal is successful, BT will become a major player in all the major verticals of the “quad-play” world – mobile, broadband, fixed line and television services. This means that competitors in each of these segments will voice their concerns with some regulatory noise. EE’s acquisition by BT would reduce one player in the TV service market space, but considering that the service is fairly new, there shouldn’t be much of a protest in this arena.

Then there is the dealing with two different owners part of the problem. While O2 is owned by Telefonica, EE is owned by Deutsche Telekom and Orange, which complicates the deal to a certain extent. BT has already announced that if the deal is given a green signal, Deutsche Telekom will end up owning 12 per cent stake in BT while Orange would hold a 4 per cent stake, there are a great deal of regulatory hurdles to jump over before this actually can be achieved.

Given that the owners are from other countries, the clearance would have to be sought from European competition authorities as well and not just Ofcom.

At the end of the day it all depends on how much of a fight competitors are willing to put out and how much do the regulatory authorities heed to their requests.