BT Is About To Regain Its Crown As The Most Dominant UK Telecoms Business
As the company prepares to buy mobile phone network EE from Deutsche Telekom (DT) and Orange, many believe it is truly cementing its ambitions to introduce full "Quad Play" packages to British consumers. If the move goes through, BT will be able to offer contracts combining mobile, broadband, TV, and - like it or not - the possibility of continued landline subscriptions. All four will slot nicely into place. Virgin Media and TalkTalk do similar things, but lack the all-encompassing fire power BT would have.
On Monday, Business Insider noted that BT looks set to complete the £12.5 billion deal. The move would bring with it 24.5 million new customers; the largest mobile operator in the country; and, ultimately, the scope to deliver new business offerings to the UK market.
Bieler says the deal will have a much larger impact on the public than BT's business activities - and is about more than just "Quad Play". EE is the UK's biggest 4G provider, which would give BT the platform to "enhance its retail arm". Basically, Bieler believes BT will look to capitalise on its phone network with its TV capabilities - the potential would be there to introduce new mobile viewing of its sports channels, for example, across tablets and smartphones. And expand its news services.
The analyst also mentions that DT and Orange will also benefit from the deal. Crucially, they're both leaving a market they've essentially "failed" in, he says.
"Both DT and Orange tried unsuccessfully for years to find a solid footing for their own respective telcos (T-Mobile and Orange UK) and later on for their combined UK operation EE," Bieler explains. "The deal would provide DT and Orange with a mix of cash and new BT shares."
Bieler says that as things stand, DT would get a 12% stake in BT and sit on the company's board. Orange would get a 4% stake and a higher proportion of cash. It seems everyone's a winner.
The Financial Times writes the telecoms and mobile market will remain competitive - there won't be fewer mobile providers and other operators will naturally react. But BT should have the upper-hand. The acquisition would lift BT's group revenues and, eventually, profitability. No longer will it be wallowing in "fixed-line telephony" alone, the FT points out - there are, as we all know, a declining number of people using old fashioned home phones on old fashioned wires.
Still, while it looks increasingly like BT will choose EE, Bieler insists that O2 shouldn't be written off. After all, at one point it looked as though its Spanish owner Telefonica would come up trumps.
Bieler tells Business Insider: "Telefonica remains in the race to sell its O2 UK operation to BT. A deal between BT and O2 UK could potentially be easier to negotiate as BT would have to talk only to one telco, not two."
"Moreover, for O2 UK it would be a sort of homecoming, as it was O2 UK (then BT Wireless) that was spun off from BT in 2001 to avoid BT bankruptcy," Bieler adds. "The cultural fit between O2 UK and BT might well be closer than between BT and EE."
Until a complete deal is done, only one thing is for certain: BT is set to once again reign supreme as Britain's giant telecoms company.