If British Telecom (BT) bought a major mobile phone operator it would create a far more powerful communications giant with a serious hand in phone lines, broadband, digital TV, and wireless carrier networks.
With all four sectors in its remit, it effectively means BT could operate the way US telecom companies do, where through bundle deals customers are roped into signing up into “triple play” or “quad play” packages. Currently, the main similar option in the UK is Virgin Media’s offerings. But these only include an option of adding a Virgin Mobile SIM card for an additional £5 a month; and Virgin, as a virtual operator, works through T-Mobile anyway, and isn’t really a big mover in the mobile business.
Spanish newspaper El Confidencial broke the news that BT is in talks with O2 owner Telefonica on Monday. Taking on O2 would mean BT reasserting itself as a “dominant telecoms provider” of Britain. (BT was the company hived off from the Post Office; it was once the UK’s nationalised telephone monopoly.) BT has also been approached by the parents of EE, Orange and Deutsche Telekom. Either could lead to a £10 billion move, the Financial Times reports. Each potential deal could result in BT bundling together digital services.
In 2014, with so many people streaming TV online and ignoring their landlines, the US strategy of forcing people to pay for bundled media — and thus maintaining them as an audience that can be sold to advertisers — must look increasingly attractive.
O2 and EE are also likely worried about the future of their UK operations, says the Financial Times, as bundle packages become more prevalent. In Spain, O2 owner Telefonica has already started providing fixed-line services alongside TV.
As El Confidencial notes, BT could become a “European giant”. Since 2005, BT hasn’t had any role in the UK’s mobile phone market. It has, though, retained a grip elsewhere. It’s still big in broadband, TV, and phone lines — and more recently shocked the likes of Sky by entering the sports world, securing the rights to broadcast Premier League football and other high-profile sport franchises through its BT Sport operation.
Everything is in place. All BT lacks is a wireless carrier service.
So if the company does follow through with a deal to buy O2 back (O2 was formed in 2002, after BT spun off its wireless business. It was acquired by Telefonica in 2006) it could gain around 24 million customers in the UK — and even more if the EE deal becomes a reality. Right now, BT has around 9.7 million fixed lines, around 1 million TV customers, and 7.5 million accesses to broadband. Combining all of these with a big UK mobile network, and a American-style bundle system, would make BT a much more powerful proposition than Virgin Media.
But that’s not to say Virgin — and other rivals — won’t react. If BT’s plan comes off, others could follow suit. This month The Telegraph reported Vodafone held early discussions to start selling Now TV, Sky’s internet streaming box, alongside a broadband package. While Liberty Global, Virgin’s US parent, bought Sky’s ITV stake for £481 million earlier this year. TalkTalk is also expanding its services and will undoubtedly look to play a part.
So enjoy your ability to buy TV, wireless and hardline phone service separately, Britain. It looks like it’s about to become a thing of the past.