Vodafone boss issues warning over BT mobile takeover

Vodafone’s chief executive Vittorio Colao warned yesterday that BT’s £12.5bn takeover of the mobile giant EE would have to be policed closely by regulators to ensure fair play for rivals.

“BT will have to behave very well,” he said. “As soon as the incumbent becomes such a large player in all parts of the market the temptation to become restrictive is high.”

The day before bids have to be in for Premier League football rights, with BT once again head-to-head with Sky in a potential £4bn auction, Mr Colao said rivals must be guaranteed access to content like goal clips at affordable prices.

He said: “Exclusivity and lack of access to content could suffocate the market. The potential for BT and other incumbents like Telefonica to squeeze margins for their competitors is very tempting.”

BT sealed its £12.5bn takeover of EE yesterday, which will see Deutsche Telekom and France’s Orange take 12 per cent and 4 per cent stakes in BT. A £1bn share placing will partly finance the deal.

Gavin Patterson, the chief executive of BT, said splashing the cash on EE would not affect his ability to bid for the football rights. He said: “This a major milestone for BT as it will allow us to accelerate our mobility plans and increase our investment in them.” He also denied that BT would be dominant in the UK market. “We have a third of the fixed-line market and will have a third of the mobile market. This deal does not concentrate the market any further and we are still a very small player in the content market.”

EE is the biggest mobile provider in the UK with 24.5 million customers, of whom 7.7 million are on 4G. But that would be eclipsed by Three’s owner Hutchison Whampoa’s planned £10bn takeover of O2 which would have more than 33 million customers. Vodafone has 19.9 million.

BT said the takeover of EE could take more than a year to complete. It will be scrutinised first by Ofcom and then almost certainly by both UK and European competition regulators.

Vodafone yesterday reported better-than-expected revenues for its third quarter. Mr Colao also said Vodafone will launch its fixed line and TV offer in late spring.

BT meanwhile identified £360m of annual savings from the takeover, mainly from marketing, IT and network costs. Initially BT will keep the EE brand and its 580 shops.