With BT’s recent purchase of mobile giant EE receiving clearance from the Competition & Markets Authority, we have been curious to see how EE would fit into BT and whether they would lose their identity and become part of BT Mobile?
Following the announcement of the £12.5 billion acquisition on 29th of January, BT has announced the first details on the new organisational structure which comes into place from April 2016.
For EE this means being split in half:
• The first half is led by EE’s new CEO Marc Allera and comprises of their mobile, broadband and TV services. This part of EE becomes BT’s sixth standalone line of business and interestingly will retain control of its branding, network assets and retail stores.
• The other half of EE is its business operations, which will now be spun off into a new business unit, BT Business and Public Sector unit which will replace the current BT Business.
So it appears, at least for the short term, that both BT mobile and EE’s mobile offerings will be managed by distinct business groups within BT, each with their own brands, tariffs and marketing – and both being competitively sold to consumers.
“We will operate a multi-brand strategy with UK customers being able to choose a mix of BT, EE or Plusnet services, depending on which suits them best,” said BT CEO Gavin Patterson.
One wonders whether one of the underlying decisions in retaining the EE identify (perhaps a rather canny one in our view), may be down to EE’s brand strength. Cited against the more unwieldy BT Mobile brand, EE’s is perhaps the better recognised, which in fickle markets can cause change – and with the mobile market dominance they hold, any churn could be substantial. Either way, we’ll see how well they continue to serve their respective customer base and how much more competitive their offerings might become in this new world of Chinese wall telecommunications.
Last January we reported on BT’s £12.5 billion takeover of mobile provided EE. We had since been awaiting to hear from the Competition and Marketing Authority (CMA) whether this move would significantly harm the competition, in not just the mobile provider arena but in the Quad-play (selling a package of fixed-line phone, mobile, internet and TV) space as well. Surprisingly, the CMA have granted BT the all clear in the EE buy out.
Both BT and EE are giants in their specialties with BT controlling 37.6% of the UK home phone market, 31% of the UK fixed-broadband market and EE holding 33.8% mobile market share. Together they hold 35 million customers between them.
Rivals, including Vodafone and TalkTalk had voiced concern during the acquisition’s original announcement calling for competition authorities to force BT to spin off its Openreach operation which maintains the UK’s copper and fibre communications cable network. This has since gone to regulator Ofcom for review for whether BT and Openreach should in fact be split up due to concerns their performance to other providers had often been poor.
The bringing together of BT and EE will likely see both cross-promotion and cross-sales between landline services and mobile. One would assume that customers buying all their telecommunications packages from both BT and EE should get monetary savings and they wouldn’t want to lose by switching their mobile carrier next time round, something that is more frequent in the mobile world compared to consumers switching their landline provider.
Another matter yet discussed is the fate of the EE brand, being relatively young at just 6 years. Despite its size as the largest in the market, BT may not be able to resist the temptation in switching the EE brand for uncool BT Mobile. If this was the case, we could see some users switch back over to other mobile provides due to BT’s lack of lustre reputation in customer services and lack of historic expertise in the mobile arena next to O2, Vodafone and even now Three.
Is this really a fair and prudent decision by the CMA in what should be a competitive marketplace?