TalkTalk slam CMA’s BT/EE decision as rivals react to takeover

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The CMA approved BT’s £12.5 billion buyout of BT, but rivals TalkTalk claim the decision has been made in isolation, which is “dangerous” for the industry

TalkTalk has blasted the Competition and Markets Authority’s decision to rubber-stamp BT’s £12.5 billion acquisition of EE, claiming it leaves the incumbent even more dominant than it was when it was state-owned.

Despite opposition from rivals, the CMA claimed combining BT and EE would not have negative impact on consumer choice or competition, leaving industry rivals, who opposed the move, furious.

A spokesperson for TalkTalk said the broadband provider was not surprised by the decision, but claimed the CMA had assessed the deal in isolation, which was “dangerous”.

“We are disappointed, although not surprised, that the CMA has waived through the BT/EE merger, even though the new entity will be even more dominant than it was before privatisation 30 years ago,” they added. “Given BT Group’s increased size and scale, the need to ensure that the UK’s broadband infrastructure is not neglected is more important than ever.

“It is dangerous that the regulator has looked at this merger in isolation, given the unprecedented levels of consolidation taking place in the wider telecoms industry. The UK has long been one of the most competitive markets in Europe, but if the Three/O2 merger also goes through, this would end. Indeed, if the experience of other European markets such as Ireland and Austria is any guide, moving from four to three mobile providers will lead to price increases of 25 per cent or more.

The spokesperson went on to quote Ofcom CEO Sharon White, who recently said “competition, not consolidation, drives investment and delivers low prices”, and called on the regulator to look at BT’s ownership of infrastructure Openreach going forward.

They added that BT will now own more than 45 per cent of UK spectrum and over 40 per cent of the consumer market, with a joint Three/O2 potentially holding 40 per cent of the telecoms market as well.

“Three’s entry into the market 16 years ago was designed to spur competition and drive down prices – a role it fulfilled magnificently. Now it will become the incumbent, with a greater incentive to protect market share instead of driving market disruption.

“Thanks to a thriving, competitive telecoms market, UK consumers enjoy some of the fastest speeds and lowest prices in Europe. There is a real risk that today’s announcement is the first step towards a slower, stagnant digital future.”

Vodafone

Vodafone also said the takeover approval puts a greater emphasis on the importance of Ofcom’s review into Openreach, due to take place next year.

A Vodafone spokesperson said: “We are reviewing the CMA’s document in full. As previously stated, we believe it is imperative that the wider market concerns relating to BT Openreach raised by a number of parties and recognised by the CMA, need to be thoroughly scrutinised by Ofcom in its Digital Communications Review.”

Mobile News contacted several of BT’s rivals for comment on the CMA’s decision, but Sky, O2 and Three all declined to comment.

Virgin Media

A spokesperson for Virgin Media claimed the CMA’s decision to pass the deal without sanctions was “a compliment” to BT’s rivals. They also called on BT to offer fair and reasonable terms to other operators.

They explained: “The new BT has nearly half the share of telecoms revenues, including the lion’s share of central government and B2B business, and it has a comprehensive copper network by virtue of inheriting the country’s 19th Century infrastructure investment. In many jurisdictions this acquisition would have had at least some conditions attached.

“Clearly, BT-EE has the resources to meet any government imposed Universal Service Obligation itself rather than recommending a tax is imposed on new entrants and transferred to itself.

“Similarly, we expect that, for the benefit of UK consumers, the company will live up to the CMA’s findings that it will offer fair and reasonable terms to challenger mobile operators.”

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