BT to close EE deal in January after winning approval from the CMA

The UK's Competition and Markets Authority (CMA) cleared BT's planned £12.5 billion (€16.5 billion/$17.9 billion) acquisition of EE from Orange and Deutsche Telekom, saying the merger is not expected to result in a substantial lessening of competition in any markets in the UK.

The country's competition regulator issued its final report early on Friday morning, some three days ahead of its final deadline on Jan. 18. It announced provisional approval of the deal in October last year.

The merger will see the creation of a fixed and mobile giant on the UK market, combining BT's broadband and fixed-line business with EE's mobile network. EE itself is already a combination of the UK mobile units of Orange and Deutsche Telekom and has focused on 4G services since launch. BT also sells mobile services under BT Mobile, but on a relatively limited basis.

In its report, the CMA noted that other operators and customers in the UK market had raised a "range of concerns", but insisted that its assessment "has been complex, detailed and rigorous". It said BT and EE operate largely in separate areas with limited overlap between them.

John Wotton, inquiry chair of the CMA, said the regulator had taken extra time to consider responses in detail.

"The evidence does not show that this merger is likely to cause significant harm to competition or the interests of consumers," Wotton said.

BT welcomed the CMA's decision and said there would be a distinct EE line of business following completion of the acquisition. It has already been announced that Marc Allera will become EE CEO, replacing Olaf Swantee who has decided to step down.

BT CEO Gavin Patterson said a combined BT and EE "would be a digital champion" for the UK.

"I have no doubt that consumers, businesses and communities will benefit as we combine the power of fibre broadband with the convenience of leading edge mobile services. I look forward to welcoming EE into the BT family," Patterson said.

Reports this week also suggested that the EE brand would be retained, but BT made little further comment other than to say it will commence the formal process of completing the deal by Jan. 29.

However, CCS Insight analyst Kester Mann said "it is inevitable that BT will move to replace the EE name," although he warned against rushing into this too soon.

"The EE brand has benefitted from strong investment to become synonymous with widespread 4G coverage. A greater priority for BT is the behind-the-scenes integration of the UK's largest fixed-line and mobile operators. Only then should it look to articulate changes to consumers," Mann commented.

Following completion, Deutsche Telekom will gain 12 per cent of BT shares and Orange will hold a 4 per cent stake. A representative of Deutsche Telekom will also be appointed to the BT board in due course.

Stéphane Richard, Orange Group chairman and CEO, said the approval of the transaction is an important milestone in Orange group's history and noted that part of Orange's DNA "was forged in the UK" over the past 15 years.

"The combination with BT is a very positive step forward for UK consumers who are set to benefit from convergent fixed-mobile services. We are very happy with today's decision, which provides an important signal for telecoms operators across Europe that the sector is ready for fixed-mobile consolidation," Richard said.

The UK mobile market could also be set for further change: CK Hutchison is hoping to buy O2 UK and merge it with Three UK to create a stronger mobile player. That deal is currently being scrutinised by the European Commission.

For more:
- see the CMA release
- see the BT release
- see the Orange release
- see the Deutsche Telekom release

Related articles:
Report: BT to keep EE brand after merger
EE says Olaf Swantee to leave after BT merger
BT wins provisional approval for EE acquisition
UK asks to take over Three/O2 review, as Vestager cautions against 4 becoming 3
BT wins plea for speedier EE probe

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