BT Group plc have confirmed that they have recently been in talks with mobile operators EE and O2 regarding a possible acquisition. O2 was originally established as BT Cellnet back in 1985 as a joint venture between BT and Securicor; however the company was subsequently spun off from BT and rebranded as O2 in 2002.
BT has been operating without a mobile service provider ever since the spin-off, but it now appears that they are looking to re-enter the lucrative mobile market. After news of these talks it would appear that BT’s preferred method of entry would be through the acquisition of either O2 or EE rather than by developing a new brand from scratch.
However there are concerns that should an acquisition such as this go ahead, consumers would suffer from reduced competition in the market. This would be due to the fact that competitors would feel the need to consolidate in order to defend against this new threat. A reduction in competition would cause consumers to have fewer providers to choose from and ultimately would end up paying higher tariffs.
This is even more worrying now that it has been revealed that the cost of line rental charges is to be increased. However it is not only BT that is raising their prices, but other big names such as Sky, Virgin Media and Talk Talk as well. While experts are attributing this price rise to the fact that consumers are switching to alternative free technology, BT have disputed this idea and have stated that the rise was simply in line with their annual price review.
Regardless of these concerns, there has been a noticeable rise in BT’s shares since these talks came to light, despite their preliminary nature.
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