BT is considering buying O2’s UK network from owner Telefónica.
The UK’s leading ISP has stressed that the talks are at a very early stage. No deal as such is on the table yet, but BT has also revealed that it’s been in talks with another UK mobile network as well.
BT isn’t commenting any further about the second network – but it’s likely that it’s EE.
Last year EE and BT signed a deal which saw BT gain access to EE’s mobile masts, a move which would allow BT to install its own equipment and launch mobile services for business and residential customers.
BT spokespeople refused to comment on who the mystery second network is. A spokesperson said:
“We have received expressions of interest from shareholders in two UK mobile network operators, of which one is O2, about a possible transaction in which BT would acquire their UK mobile business. All discussions are at a highly preliminary stage and there can be no certainty that any transaction will occur.
“We continue to develop our own plans for providing enhanced mobile services to business and consumer customers, in line with our previous announcements. We remain confident of delivering on these plans and have also been exploring ways of accelerating them, including assessing the merits of an acquisition of a mobile network operator in the UK.”
In the 4G auction it was revealed that BT, under the name of Niche Spectrum Ventures, had purchased a slice of the 2.6GHz spectrum.
Buying up O2 or EE’s mobile network means that BT will be able to complement the 4G rollouts of these existing networks. EE’s 4G rollout is by far more advanced than O2’s.
EE’s 4G services are available to over 75 per cent of the population whereas O2’s 4G currently covers around 45 per cent. EE has also launched LTE-Advanced services which claim to provide faster download speeds than BT’s own superfast broadband products and it’s trialling up to 400Mbps 4G in Wembley Stadium next year.
Buying up EE’s mobile network might also entail include EE’s fixed line broadband subscribers. This would see BT cement its position as the UK’s biggest ISP by subscriber size – adding EE’s 790,000 broadband subscribers would see BT’s 7.4 million customer base swell to 8.2 million.
EE’s recently launched connected TV service offers customers an alternative to YouView. It’s a blend of digital terrestrial TV and on-demand services, like YouView, but with a greater emphasis on using phones and tablets to access content.
As BT is a YouView shareholder, EE TV’s future could be in doubt if the whole company is bought up.
If BT bought O2, it would effectively be supplying rivals TalkTalk with a mobile service. TalkTalk, the UK’s fourth biggest ISP by subscriber size, recently announced that it signed up O2 to power its TalkTalk Mobile services.
Buying O2 would also see BT able to create a more balanced 4G network. O2 did not bid for any of the higher frequency 2.6GHz licences in the auction, saying it was becoming too expensive. O2 owns licences for parts of the 800MHz spectrum along with 2G and 3G holdings in the 900MHz and 1800MHz spectrum. BT’s 2.6GHz licence could plug O2’s high frequency gap, allowing for better coverage in cities.
It’s possible that BT could be entertaining offers from Vodafone and Three. Doing a deal with the former network might take the jam out of rival Sky’s doughnut and despite having the smallest 4G footprint, Three has proven that it can hold its own against the big boys.
Any buyout of either network would have to be approved by telecoms regulator Ofcom. BT already enjoys a dominant position in the consumer broadband market and buying one of the bigger UK mobile networks would give it even greater clout.