BT looks to steer EE deal past competition watchdog

BT to present its case to the Competition and Markets Authority this week

BT will this week begin putting forward the case for its £12.5bn takeover of mobile operator EE to the Competition and Markets Authority (CMA).

The company agreed to buy EE, the UK's largest mobile operator, in February, in a deal that BT chief executive Gavin Patterson said was a "major milestone" for the telecoms giant, as it would allow it to accelerate its mobility plans.

The purchase of EE had a knock-on effect in the telecoms market, with Telefonica announcing that it would be selling O2 to Hutchison Whampoa, which owns rival mobile operator Three, for £10.5bn, while BT's pay-TV rival Sky signed a deal with O2 to offer mobile phone services to UK customers in a wholesale contract. BT will therefore be behind Three in terms of overall mobile subscribers after its purchase of O2.

However, BT's rivals Sky, TalkTalk and Vodafone are worried that the deal to buy EE would give BT with far too much financial muscle - indeed they have already complained that BT will exceed the amount of radio spectrum any single provider is allowed to have under its control if the purchase goes through. BT is expected to allay those fears by telling the CMA that it will sell off some its existing spectrum and purchasing more of the 800MHz airwaves further down the line in order to hit EE's target of 99 per cent 4G coverage by 2017.

Another concern for BT rivals Virgin Media and CityFibre in the broadband market is EE's deal with Three to provide joint infrastructure called MBNL. MBNL connects up masts in order to send traffic over cables owned by BT, Virgin Media and CityFibre, but if BT acquires EE there are fears that the company could cut costs by switching traffic onto its own cables. Again, BT is expected to counter by stating that its infrastructure arm Openreach will operate separately from MBNL and that it will therefore continue to compete with rival network owners on the same terms.

Scrutiny over the EE takeover is expected to take several months. Regulator Ofcom is also expected to launch a review of the business connectivity market at some point this year.