Can consolidation lead to disruption?

Written by on November 25, 2014 in News with 0 Comments

In the UK we have competition, of a sort. But amidst calls for the regulator Ofcom to review the playing field, which some are saying is not so level, comes news that two mobile phone companies want BT to buy them. Telefonica is known to have approached BT, offering up O2, in exchange for 20 percent of BT and it is rumoured that EE has also approached the company. A period of consolidation seems to be on the cards.

According to telecompaper, BT reacted to ‘recent press speculation about a potential bid for O2 UK, [saying] all discussions are very preliminary and there is no certainty that any transaction will occur. BT said that while it was continuing to develop its own plans to provide enhanced mobile services to businesses and consumers, in line with previous announcements, it has also been exploring ways of accelerating them, including considering the merits of acquiring a UK operator.’

The deal, according to a spanish website, would be in order to create a mega carrier (a utility in the eyes of President Obama) that would compete with AT&T. And presumably Vodafone.

If communications is a utility, then economies of scale is probably the only way to make the business work, and maybe we should look at this new as the writing on the wall.

That said, BT will have a couple of problems to solve. It is under attack over its apparently independent company Openreach that looks after the infrastructure on completely impartial terms. Don’t mention Openreach and independence to our colleagues over at BillingViews, they are likely to choke on their coffee they will be laughing so much. And, of course, the network coverage in the UK is so abysmal that almost endless investment in the network will be needed to bring a mobile network up to even close to scratch.

Watch this space, it could be fun or scary, depending on where you sit.

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