BT Will Launch Mobile Network Even If It Doesn’t Buy EE

BT plans to offer mobile services to consumers even if its proposed £12.5bn takeover of EE doesn’t come to fruition.

The company has just released its results for the third quarter of 2014, reporting a three percent year-on-year drop in revenues to £4.8bn, but a 12 percent increase of profit before tax to £694m as consumers flocked to its broadband and television services.

BT has plans to re-enter the consumer mobile market after a ten year absence as the UK market moves towards convergence. It initially planned to offer services using a hybrid network comprising a Mobile Virtual Network Operator (MVNO) partnership with EE and the BT Wi-Fi network of hotspots.

EE negotiations

However, reports have suggested BT is struggling with the technology that would facilitate a seamless connection between wireless and cellular networks and late last year, the company entered takeover discussions with both O2 and EE before settling on the latter.

BT CEO Gavin Patterson said the company said negotiations with EE’s co-owners Deutsche Telekom and Orange were going well but its ‘Plan B’ was still on the table.

“Mobility is a key growth area for us,” he said. “We are making good progress on our due diligence in relation to a possible acquisition of EE and will make further announcements in due course.  In the meantime, our Consumer mobile launch plans remain on track.”

The company added to investors that although an EE takeover would “accelerate” BT’s mobile strategy, its alternative plans were still progressing.

“We would own the UK’s most advanced 4G network, giving us greater control in terms of future investment and product innovation,” said BT of the pending takeover. While continuing these exclusive discussions, we are progressing our own plans for providing enhanced fixed-mobile converged services for businesses and consumers.  We remain confident of delivering on these plans should a transaction not take place.”

Broadband growth

BT added 119,000 new broadband customers during the quarter, with 209,000 new additions to its fibre network, although some of these will be existing customers. In total, the company has 2.7 million superfast users, around 35 percent of its total broadband base.

In total, there were 375,000 new connections to the Openreach fibre network in the three months leading up to December 31 as it reached 22 million premises – 630,000 of which are in areas covered by government funded Broadband Delivery UK (BDUK) projects.

BT says that 44 percent of fibre additions were through providers other than itself, suggesting there was a more competitive market for fibre than its rivals claim. Regulator Ofcom has recently published a draft proposal that would force BT would maintain a minimum price margin for its fibre products to ensure it doesn’t undercut other service providers using Openreach, and the company hasn’t yet ruled out an appeal.

Network investment

“Openreach achieved the highest growth in the number of landlines on record.  It was also our best ever quarter for fibre broadband net additions,” continued Patterson. “All the major communications providers are responding to the strong market demand for fibre broadband, helping to drive take-up in what is already a very competitive market.”

Patterson stressed BT would continue to invest in the Openreach fibre network, as demonstrated by its commitment to trials of G.Fast technology.

“BT has been at the forefront of fibre innovation and investment, from which all communications providers benefit.  We aim to keep it that way,” he said. “So today we’re announcing large-scale pilots this summer of ultrafast broadband with G.fast.  We now think we can deploy this technology at scale which will enable us to deliver ultrafast speeds of up to 500Mbps to most of the UK within a decade.”

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