BT defends EE deal

The company prepares to face competition scrutiny about the takeover.

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By :  ,  Financial Analyst

Last week, shareholders at BT gave the green light to a takeover deal to acquire EE. The decision was almost unanimous, with 99 per cent voting in favour of the deal at an investors' meeting in London.

This week, it looks like the company is preparing to make its case to competition watchdogs, arguing that the £12.5 billion takeover of the mobile operator should be given the stamp of approval.

BT will hand over hundreds of documents to the Competition and Markets Authority (CMA), providing evidence that its return to the mobile market is likely to benefit consumers. The company says that in other European countries, it's common to bundle mobile service with broadband, home phone and pay-TV – and this helps to keep prices down.

Scrutiny is also expected to come from BT's competitors – like Sky, TalkTalk and Vodaphone. Those companies are worried that the deal to acquire Britain's biggest mobile operator will further boost BT's financial power.

It's likely that they will argue that BT should be forced to sell off some parts of its mobile spectrum, as the EE deal would mean breaching a current Ofcom-imposed cap. New regulations, however, are set to come into play next year. These would provide more flexibility and the BT-EE deal would fit within those rules.

Other issues that BT will have to address include the company's desire to obtain a larger allocation of the 800MHz airways, and that the merger comes with obligations to provide network capacity to virtual network operators.

The case, which will be the largest competition deal put before the CMA, is expected to be a lengthy process, with analysis likely to continue until th end of the year. Then, a second phase will probably stretch well into next year.

Fourth-quarter results are expected to be released this week for BT's consumer arm – and experts believe these will show growth in profitability and revenue. The numbers should be boosted with more customers taking bundled services, as the company started selling its own mobile services during the period. At 09:50 BST, shares in London were up to 463.95p.​

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