BT completes £12.5bn acquisition of EE

BT returns to the mobile market 15 years after flogging off BT Cellnet to reduce debt

Telecoms giant BT has re-entered the mobile market after its £12.5bn deal to buy EE was finally completed today - almost a year after a deal was struck with the mobile operator.

It follows clearance by the Competition and Markets Authority (CMA) on 15 January, which concluded that BT's acquisition was unlikely to harm competition in the mobile communications market. "The evidence does not show that this merger is likely to cause significant harm to competition or the interests of consumers," claimed the CMA's John Wotton.

The deal comes around 15 years after BT exited the mobile market when it re-branded BT Cellnet as O2, and floated BT Wireless on the London Stock Exchange as mmO2. The O2 network was subsequently acquired by Spanish national telco Telefonica in 2005, which is now in the process of selling that business to Hutchison Whampoa's Three.

EE, meanwhile, is the product of the merger in 2008 of France Telecom's Orange and Deutsche Telekom's T-Mobile businesses in the UK, which was completed in 2010.

Across Europe, national telcos are re-asserting their old dominance in their national territories as mobile data usage booms. They have the network backbone within their own geographies to be able to handle the burgeoning networking demands and, as such, operators without either scale - which is what Three is seeking with its acquisition of O2 - or a national data network have been put at a market disadvantage.

The European Commission, meanwhile, has largely supported the current wave of consolidation in the mobile market across Europe. It reasons that intensive competition has pushed prices down too far and, therefore, discouraged sufficient investment, quickly enough, in fast and reliable 4G networks. It is looking to re-model Europe's mobile market more along the lines of the US mobile market.

At the same time, BT itself is coming under intensified market and political pressure to float off its UK communications infrastructure arm BT Openreach, which rivals say gives BT an unfair advantage, and which has been accused of providing inadequate services and slow speeds. BT, however, rejects the criticisms and has rejected calls for Openreach to be split and floated off.