Fullscreen User Comments
Share on Twitter Share on Facebook Share on LInkedIn Share on GooglePlus

Loading…

Loading…

Loading…

Loading…

Loading…

Competitive sport: BT to launch MVNO on EE before takeover

chasing the ball

via Flickr © ·tlc∙ (CC BY 2.0)

BT is to announce the launch its own 4G mobile service this week - as an MVNO on EE, the market-leading network it’s proposing to buy for £12.5 billion.

According to the Daily Telegraph the MVNO deal was agreed last year (before the takeover bid) and BT’s service is to be called BT Mobile.

It all makes sense. BT’s entire strategy hinges on its ability to become a content provider and it’s become crystal clear that you have to do more than pump content across your own fixed infrastructure to a specific point to fulfill this role. You need to spray it across multiple networks to have it appear on any device or location your customer wants… and that means owning a mobile arm will be essential.

BT will almost certainly end up owning EE but the deal may not complete until well into 2016 and it needs to start offering mobile right now to make its horrendously expensive content pay off. Hence the MVNO.

Early this year it  announced a new football deal for 2016-19  where between them, Sky Sports and BT Sport will pay £5.136bn to screen premiership games. What’s the bet that BT sport will be zero-rated on BT Mobile once BT has its hands on the network?

Looking back, BT has essentially ‘short sold’ its original mobile interest - O2 - in 2005 for £18 billion when it was the UK number two behind Vodafone. Not a bad little manoeuvre in hindsight as it now looks likely to buy EE, today’s UK market leader,  for two thirds that price at 12.5 billion in cash and shares.

If you’re one of BT’s competitors, though, it all looks ominous. Vodafone’s CEO has talked of  the return of  ‘old BT’ when the incumbent dominated the UK market; while other players worry about BT’s continued ownership of Openreach, its infrastructure arm. One fear is that Openreach will be favoured when it comes to  providing the dark fibre necessary for high-speed backhaul from the EE network.

And indeed it likely will be. As a result there are renewed calls for Openreach to be broken away from BT. That doesn’t seem likely, but turning down the break-up demand might increase the pressure on the regulator, Ofcom, to find other ways to ‘even up’ the UK competitive landscape. MVNO anyone?

Join The Discussion

x By using this website you are consenting to the use of cookies. More information is available in our cookie policy. OK