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5 reasons why a BT bid for O2 makes perfect sense

BT could soon make an announcement on whether it intends to hammer out a deal with O2 or EE. 

Some sites are saying today is the day BT will announce its plans, some are saying it’s later this week. Sources and spokespeople at BT are tight-lipped, refusing to comment on speculate on rumours.  

While we won’t know for sure what BT’s plans are until they’re revealed, here’s some reasons why we think the UK’s biggest ISP could make an offer for O2 instead of EE. 

A bid for O2 may be more Ofcom-friendly

No matter how much money or shares BT throws at either network, telecoms regulator Ofcom will need to approve any deal. 

As we said when we listed the reasons why BT could go for EE instead, we pointed out that EE is the UK’s biggest mobile network and is has just under 800,000 fixed line broadband customers. 

Assuming BT made a bit for EE Limited lock stock and barrel, it’d fortify its position as the UK’s biggest ISP and become the country’s biggest mobile provider at the same time. 

Ofcom might not approve such a deal. Unless BT agreed to make concessions to smaller ISPs, in a similar manner to how Orange and T-Mobile were required to give Three a leg up, Ofcom might not OK anything. 

Going with O2, which sold its fixed line broadband business to Sky last year, potentially sees BT facing a smaller regulatory hurdle. 

BT fibre provides backhaul for O2’s network

Thanks to a deal signed last April, BT is now supplying O2’s mobile network with backhaul, the intermediate links between core backbone networks and O2’s 4G masts. 

Merging with O2 means that BT wouldn’t have to invest time and money into connecting masts to its network. It could get on with rolling out its mobile network rapidly across the country and catching up with EE, which provides 4G services to over 75 per cent of the British population.

O2’s 4G network meanwhile is available to roughly 50 per cent of UK folks. BT’s rural broadband projects mean that it could also use backhaul connections to power masts in remote areas. 

If Openreach’s plans to use telephone poles and cabinets as mini masts ever seen the light of day, BT would be well positioned to plug coverage gaps on a small level too – something EE is already doing with micro cells

5 reasons why a BT bid for O2 makes perfect sense
Will BT go for O2 over EE?

BT’s 4G licences plug O2’s high frequency gap

As we’ve argued elsewhere, O2 doesn’t own any licences to use the high frequency 2.6GHz band of the airwaves for 4G. BT does. 

BT won a pair of 15MHz channels and 20MHz of unpaired frequencies in the 4G spectrum auction. 

O2 missed out on getting any 2.6GHz licences, but it snapped up a piece of the 800MHz action to complement its existing 900MHz and 1800MHz holdings

In plain, non-techie English this means an O2-powered BT network would be able to provide 4G coverage in a wider range of areas – high frequencies for the densely-packed cities, low frequencies for distant rural areas. 

BT buying O2 would really take the jam out of TalkTalk’s doughnut

Rivals TalkTalk recently signed a deal which sees O2 providing the signal for its TalkTalk Mobile virtual network product. 

TalkTalk is aggressively promoting its mobile service, practically giving away SIM cards with broadband bundles

The UK’s fourth-biggest ISP is comfortably above distant fifth-placers EE and it’s gaining on Virgin Media in terms of subscribers. 

TalkTalk is investing heavily in its FTTC (Fibre to the Cabinet) services, offering up to 38Mbps for an extra £10/month. 

In the past it’s called for Ofcom to lower the price it has to pay Openreach, BT’s network arm, for access to FTTC services. In this case, Ofcom decided that the prices BT has set were fair, much to the chagrin of TalkTalk. 

Having to potentially pay BT twice to deliver services to its customers will serve to stick in the craw even further and may cause may see TalkTalk to shop around for another network partner.

BT becomes a full quad play provider

While the same would be true if BT bought EE, buying O2 would see BT become a true quad play provider. 

Virgin Media, TalkTalk and EE currently offer their customers the option to save money by taking all four services – broadband, TV, home phone and mobile – from one provider. 

BT’s TV offering might be fragmented and confusing compared to others, but that’s in part down to a complicated and lengthy dispute over Premier League football rights – something that could soon be resolved. 

Once BT is in a position to offer Sky Sports and BT Sport channels on its YouView-based boxes, you can be sure it’ll start aggressively pushing this, alongside deals with the likes of Netflix.  

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