BT gets ready to put its case for EE acquisition

BT could submit its plan to buy UK mobile operator EE to regulators as early as this week, formally starting a process that will last several months with a decision expected by the end of March 2016.

The planned £12.5 billion (€16.9 billion/$19 billion) deal was approved by BT shareholders last week, with over 99 per cent of the votes cast in favour. Now, the proposed acquisition is to be reviewed by the UK's Competition and Markets Authority (CMA).

Jefferies analysts noted that the CMA is understood to be in the information-collecting phase and will soon start its phase one review, which is expected to take eight weeks. The CMA is likely to conclude that a more detailed second-phase review is necessary, the analysts noted.

Jefferies said it believes that "eventual approval is highly likely", given that BT-EE would not result in any material increase in retail market shares in either the mobile or fixed broadband markets.

"Interest over the next year will focus on potential remedies, in particular how the CMA proposes that mobile be dealt with within Ofcom's ex ante margin squeeze testing of BT price plans," the analysts added.

The Financial Times commented that the proposed deal would be the largest competition case put before the CMA. BT is expected to argue that the acquisition will not lead to a dominant market position in mobile or broadband as there is little overlap between the two businesses. Following the deal, BT would have a 32 per cent share of the mobile and fixed telecoms market.

The FT noted that BT is expected to face calls from rivals such as Sky and TalkTalk for the formal breakup of its Openreach business, while Vodafone UK is expected to seek greater control over access to BT's broadband network.

BT agreed definitive terms in February to buy EE from existing owners Orange and Deutsche Telekom, bringing to an end the first phase of a process that is set to turn the former UK incumbent into the market's biggest converged provider of fixed and mobile telecoms services.

The operator has since launched its own consumer mobile services under BT Mobile, using the EE network. EE, meanwhile, said it is "firmly on track" to reach 14 million 4G subscribers by the end of the year.

For more:
- see this Financial Times article (sub. req.)

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