back to article BT and EE, O2 and Three: Are we in for a year of Euro telco mega-mergers?

So far 2016 looks to be the year of mega telecoms deals in Europe, with the soon-to-complete £12.5bn EE/BT deal in the UK set to have a major impact on the market. On top of that is the £10.25bn merger between O2 and Three, which could go ahead later this year, although European regulators have treated this with a less-than- …

  1. Blane Bramble

    Picky but...

    Shouldn't it be O2 not 02 - should I trust analysis that doesn't even get the company name right?

    1. Roland6 Silver badge

      Re: Picky but...

      Well if we are being picky, we should also note that an article about UK mobile telcos, with an aside about recent events in France isn't really about Euro telco mega-mergers...

  2. msknight Silver badge

    Investing twice as much....

    ... for a country with six times the population and, where is that money coming from? Oh, yes, less competition means they can hike the prices, so they get the money from the consumer, in the first place.

    How about seeing some figures like investment as a percentage of profit, or turnover, or something.

  3. Oh Matron!

    The USA....

    Does NOT have "just four" operators. Lazy research... US Cellular, for example, has 4.8 million subs

    1. Anonymous Coward
      Anonymous Coward

      Re: The USA....

      True, but the US only has 1 operator per region, because competition is unamerican.

      1. paulf Silver badge
        WTF?

        Re: The USA....

        "Certainly Europe has a vastly fragmented market, with KPMG estimating the region has 150 mobile operators. In contrast, the US has just four."

        This whole statement is ambiguous - not just because the US has more than four operators (as mentioned above).

        1. Was KPMG not able to actually count, rather than estimate, the number of operators?

        2. That suggests they're including MVNOs (harder, but not impossible, to count than MNOs as many will be smaller/niche players). Were KPMG not able to tell the difference between MNOs that also offer retail service (i.e. vertically integrated companies like Vodafone, O2 etc) and MVNOs like Virgin Media with no physical network?

        3. That Europe has so many operators is probably because it consists of many separate Soverign nations that allocate service licenses separately, albeit with some coordination on standards and frequency use. For example did KPMG consider Orange France and Orange Spain to be separate, or Three Ireland to be separate to Three UK? The US would show more operators if they'd considered all the constituent acquisitions that went into the current big operators Verizon, AT&T, T-Mobile and Sprint.

  4. Doctor Syntax Silver badge

    "Look at the US market, it has far less competition, yet on average broadband providers invest at twice the rate of European, and the gap is growing."

    But nevertheless http://www.theregister.co.uk/2015/12/31/us_broadband_speeds_up_but_still_crap/

    1. Tom 7 Silver badge

      providers invest at twice the rate of European, and the gap is growing

      a combination of large geographical distances and the inefficiency of no competition.

      Half of which will be reinforced over here if the is insane deal goes ahead.

  5. Voyna i Mor Silver badge

    Talk about special pleading...

    The US is the place where some people need 4 mobile phones because, carriers, and the broadband providers lobby to prevent communities from setting up their own wireless networks because they know they could not compete.

    However - why is the BT/EE merger apparently OK? Monopolistic, anti-competitive company allowed to take over a mobile operator as well thus allowing even more anti-competitive practices? It just seems wrong to me. If they control not only the landlines and the installation but also a large slice of the mobile bandwidth, that seems to be a de facto monopoly on communication in a number of areas. The US example, where end users even get stuck with only being allowed the phones, loaded with crapware, selected by their unavoidable mobile operator, seems the worst of all worlds, yet that's what the BT/EE merger looks like.

    1. Zippy's Sausage Factory
      Black Helicopters

      Re: Talk about special pleading...

      Because BT have always been super helpful to GCHQ. This is nothing more or less than special treatment in exchange for services rendered.

      1. Otto is a bear.

        Re: Talk about special pleading...

        But then BT used to own O2, and went out and bought Huawei exchange kit which really pissed off HMG. You couldn't for a time sell BT anything to government.

        1. Voyna i Mor Silver badge

          Re: Talk about special pleading...bought Huawei exchange kit which really pissed off HMG

          And then HMG discovered that Huawei kit was unpopular with the US because it lacked the backdoors in US kit which let in the NSA, since when Huawei has been much better regarded over here.

          1. Zmodem

            Re: Talk about special pleading...bought Huawei exchange kit which really pissed off HMG

            its more likely all in the small print when the government sold the network to BT in the 80s, at worst the government could probably just revoke the sell at anytime, all of the government war lines that are not connected to any other network still need to be operational

  6. Charlie Clark Silver badge
    Thumb Down

    However, John Strand, a telecoms analyst, opposes this view. "There's no academic evidence to support the idea that greater competition leads to more investment," he says.

    What the fuck is that guy smoking? Oh, he's on a retainer for one of the vested interests.

    Competition is a key driver of innovation and investment. It was the combination of industry standards (GSMA) and regulated competition that drove the European telecoms market back at the turn of the millennium. Without it it's highly unlikely that 3G would ever have been deployed. The US has really only been playing catch up and network quality drops a lot as soon as you get outside the larger cities.

    The rules for competition for all industries in Europe are pretty clear. Indeed it is these very rules which are facilitating the development of true cross-border services. The European Commission can intervene in national markets but only within clearly defined limits. But, let's face it, it will do a far better job of regulating telecoms in the UK than Ofcom has managed so far. Wholesale pricing and the phasing out of roaming charges will do more to strengthen competition than the number of national operators.

    1. Anonymous Coward
      Anonymous Coward

      But, let's face it, it will do a far better job of regulating telecoms in the UK than Ofcom has managed so far.

      Bungle and Zippy could do a far better job of regulating UK telecoms than Ofcom, so the barrier's not been set overly high, I'd suggest?

  7. JimmyPage Silver badge
    FAIL

    Is it a losing battle ?

    As far as I know, every time "competition" has been fostered, then end result is fewer players.

    The UK energy and cable markets being a paradigm.

    We started off in the 80s, with several small, localised cable operators.

    Now there's only Virgin.

    We started off in the late 90s with several small, localised energy suppliers[1].

    Now there's EON/EDF and BG (who all have resellers - not the same thing as competition)

    [1]In 2002 I signed up with Amerada. In a shadow of the old "how do you know you work for a dotcom company ?" (you've worked for 5 companies in two years and never moved desks) I found myself with 3 different outfits over 4 years without ever changing.

    1. Anonymous Coward
      Anonymous Coward

      Re: Is it a losing battle ?

      As far as I know, every time "competition" has been fostered, then end result is fewer players.We started off in the late 90s with several small, localised energy suppliers[1]. Now there's EON/EDF and BG (who all have resellers - not the same thing as competition)

      Look who's not being paying any attention. There's now about thirty active, independent energy suppliers to choose from (go and look 'em up on Uswitch or Ofgem), far more than there were in the 1990s. Ignoring the big players, the largest of these new entrants has grown from zip to over a million customers, and you've got a choice of cooperatives, green energy suppliers, council owned, independent commercials, or external branded suppliers (eg Co-op). Few of those are resellers for the large companies (only SSE and British Gas have what are referred to as "white label" suppliers, primarily Sainsbury's Energy, and Marks & Spencer Energy). Getting an energy supply licence is cheap (£400 odd) so why not set one up yourself if you;re not happy with the current level of choice?

      Regarding the chop and change, if you join a new entrant supplier in any established market, what do you expect? Few companies enter new markets with long term survive and grow plans, they simply want to make the founders rich, and when they've had enough they sell out, either to another new entrant or an established player. Or like many new entrants in all markets, they find that the other man's grass was not actually as green as it looked, and their customers get acquired when they go to the wall.

      Having said that, this growth of "competition" in energy is a recent regulatory creation by DECC tilting the playing field in favour of small suppliers. In commodity markets like energy and telecoms, there's significant economies of scale, and absent intervention you'd expect a functioning market to converge on a small number of very large players, with small niche positions held by challengers only in segments that the big players can't or won't serve. Where Ofcom do nothing we see exactly this, of consolidations, a lot of product choice even if little supplier choice, some innovation but limited attention to uneconomic markets. In the obsessively regulated energy industry, you see the opposite, of fragmentation without innovation, and money being thrown at the wall under the guise of ECO or WHD.

      Which would you prefer?

      1. Anonymous Coward
        Anonymous Coward

        Re: Is it a losing battle ?

        @ Ledswinger

        the vast majority of those so called suppliers actually just supply a bill & don't generate any of their own electricity or gas.

        the regulator basically made a market for them at our expense by ensuring there is some profit to be had for the niche players. They all know that the greater their costs of supply the more they will earn by adding whatever their margin is and passing on to us whilst doing the bare minimum possible top provide a service. They are all hurting now as wholesale prices have plummeted.

        1. Anonymous Coward
          Anonymous Coward

          Re: Is it a losing battle ?

          the vast majority of those so called suppliers actually just supply a bill & don't generate any of their own electricity or gas.

          Christ, it's certainly a losing battle with you lot today. If you haven't encountered my comments before, I would happen to know that most suppliers are just retailers, because I work in the sector. But so f***ing what if they don't actually generate what they sell? Do you expect Tesco to operate the farms for its carrots? Car dealers to make their own cars? PC World to build computers? Arqiva to make TV programmes? Vodafone to actually make their own handsets?

          Over the years there have been repeated investigations into whether the energy market works, and whilst there's been the sort of detail transgressions you'd expect in any industry, overall the market does work. The latest multi-million pound investigation by the Competition & Markets Authority is about to issue its report, and there doesn't look to be much that they're going to find (although that won't stop the Daily Mirror wheeling out the usual "fat cat energy bosses laugh whilst pensioners starve" crap).

          Integrated generator-suppliers don't have any real advantage, and in fact three of the larger suppliers are at various stages of selling or closing all of their upstream generating assets (one announced, one inevitable, and one an "emergent strategy". Funnily enough there's not a big queue of buyers.

          1. jonathanb Silver badge

            Re: Is it a losing battle ?

            Tesco have their own shops and distribution network. Vodafone have their own phone masts. No matter who you buy your electricity from, you get exactly the same electrons through exactly the same cables.

            Imagine if you went to your local supermarket and could choose between an Asda till and a Tesco till at the exit. That's what competition in the electricity market is like.

          2. Anonymous Coward
            Anonymous Coward

            Re: Is it a losing battle ?

            @ Ledswinger

            PC World has their own pc brand called Advent, Car manufacturers also run dealerships (Mercedes), VF do have their own branded handsets. All compete with others supplying similar stuff in a naturally competitive environment.

            Despite working in the sector you do clearly miss the point that utility bills where much cheaper before so called deregulation and there was greater generating capacity back then too.

            There was no real market and it has been created by introducing artificial measures to keep costs high at our (end customers) expense. as some else pointed out (sorry can't see your name), its like shopping in a supermarket and then choosing asda or tesco etc checkout to pay at, each applying their own offers.

          3. Roland6 Silver badge

            Re: Is it a losing battle ?

            Integrated generator-suppliers don't have any real advantage, and in fact three of the larger suppliers are at various stages of selling or closing all of their upstream generating assets (one announced, one inevitable, and one an "emergent strategy". Funnily enough there's not a big queue of buyers.

            Sort of proves the point that what started out as a market with several players is consolidating into a few big players, who were big in the first place, just as we're seeing with the MNO's. [Aside: Three might not have been 'big', but Hutchinson Whampoa...]

  8. Defiant

    DOH

    "the BT/EE deal could change the entire landscape, as it will create the first truly joined up quadplay" - What do you think Virgin Media is

    1. JimmyPage Silver badge
      Flame

      Re: What do you think Virgin Media is

      Crap ?

      I suggested 5 years ago they could offer a combined mobile-landline-BB-TV deal, such that you could have a "family" of mobiles that would be free-call to each other (cf. giffgaff). The application being even if your sprogs have used up their credit, they can call home.

      Given Virgins unique capability to offer such a service, you'd think it would be a no-brainer.

      Didn't even get a reply (which it turns out is SOP whenever Virgin have a business opportunity).

      The older I get, they less impressed I am by "the market".

    2. Sir Gaz of Laz

      Re: DOH

      Virgin's mobile offering is as an MVNO, using EE's network. So although it does offer quad play services, it is not as a fully integrated operator.

      1. Chris King Silver badge

        Re: DOH

        "Virgin's mobile offering is as an MVNO, using EE's network."

        If the BT-EE merger goes through, will Virgin suddenly find themselves as a MVNO on a (now much-bigger) competitor's network ? That's not a healthy position to be in, especially if/when the contract's due for renegotiation - as anyone who had a Mobile by Sainsburys SIM will tell you.

      2. Defiant

        Re: DOH

        It's still quad play

    3. Anonymous Coward
      Anonymous Coward

      Re: DOH

      Virgin don't own a mobile network, they're an MVNO.

  9. Teddy the Bear
    Thumb Down

    Quad play is overrated

    There's been huge interest on the continent in quad-play, but I'm not convinced there's a compelling reason for it for the UK at present.

    Until consumers can actually get unbeatable quad-play deals, any telco offering them is on a hiding to nothing. I'm really surprised BT/EE are pursuing such an enormous merger based on an untested product.

    1. Captain Queeg

      Re: Quad play is overrated

      The thing with quad play is that coverage is the great unknown.

      I take Sky triple play but their choice of partner for mobile service would be the decider around quad play, however attractive the bundle was. i know they're flirting with O2, but given my experience that really wouldn't appeal to me.

      The killer might be a MVNO that roams across 2 or more networks though - if, Sky or anyone could offer that it could become compelling as quad play.

      1. Chris King Silver badge

        Re: Quad play is overrated

        "The killer might be a MVNO that roams across 2 or more networks though - if, Sky or anyone could offer that it could become compelling as quad play."

        Roaming MVNO's already exist, but they're expensive compared to the ones that don't - so they're unlikely to become part of a "pile it high, sell it cheap" quad-play package.

  10. Zmodem

    O2 and three, its more like

    £10.20bn = three

    £00.05bn = O2

  11. Anonymous Coward
    Anonymous Coward

    Sky and Vodafone merger next? :)

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