EE has now confirmed that it’s been holding talks with BT.
Sources at EE are refusing to comment on the nature of the talks, but it’s thought that BT is considering buying EE’s – or O2’s – mobile network.
Deutsche Telekom AG and Orange SA, the shareholders of EE Limited, have issued a joint statement confirming that talks between the UK’s biggest fixed-line ISP and the UK’s biggest provider of 4G services are taking place.
The statement reads: “Deutsche Telekom AG and Orange SA, the joint shareholders of EE Limited, regularly analyse the development of the market in which EE operates, evaluating various strategic options which have the potential to create value for EE’s shareholders and strengthen the market position of EE.
“As one of these options, Deutsche Telekom AG and Orange SA are having highly preliminary exploratory discussions with British Telecom, although it is too early to state whether any transaction may occur.”
EE and BT already have a relationship which sees BT able to access EE’s masts. BT has been preparing to launch a mobile service using EE’s infrastructure. It’s thought that BT would offer its consumer and business customers bundled services – broadband, TV, home phone and mobile – in the same way that TalkTalk and Virgin Media do.
Terms of the existing partnership between the two companies might be a barrier to BT seeking a deal with O2 or any other rival network.
Buying O2 would see BT essentially reclaiming its former mobile network – O2 began life as BT Cellnet back in 1985 – and able to plug the 2.6GHz-shaped gap in O2’s 4G portfolio at the same time.
Any buyout will be subject to approval from telecoms regulator Ofcom. BT, EE and O2 all enjoy healthy positions in their respective markets and so any merger will need to be scrutinised closely.
Part of the conditions of EE’s creation meant that rival network Three, the UK’s smallest mobile network, was allowed access to a number of EE’s masts. It’s possible that BT may have to enter a similar agreement.
Sky is also rumoured to be seeking a partnership with Vodafone, although nothing official has been announced by either company.