Credit: BT

BT just can't wait to get into mobile

The telco has launched sim-only contract deals ahead of its planned buyout of EE.

by Jack Torrance
Last Updated: 02 Jul 2015

It seems BT just couldn't wait to get a slice of the mobile phone market. The telco is currently waiting for regulators to approve its £12.5bn acquisition of EE, Britain's largest mobile phone network. But today it's launched its own range of 'sim-only' 4G deals, returning to the mobile market almost a decade after it sold off O2.

The move is a sign BT is super eager to offer so-called 'quad-play' packages of phone, mobile, TV and broadband packages. Its existing broadband customers will get discounts of up to 50% on mobile contracts and all BT mobile customers will get BT Sport free via an app. Unsurprisingly, the contracts will be run through EE's network of masts.

'An entry tariff of £5 a month will grab headlines, but inclusive access to BT Sport and five million wi-fi hotspots offers important differentiation in a cut-throat field,' said Paolo Pescatore, from the telecoms consultancy CCS Insight. 'We expect initial low-key marketing to heat up as BT makes a broader assault on the bundled telecom market over the summer.'

Perhaps most importantly, it will give BT an advantage over arch-rival Sky, whose deal with O2 to start providing its own mobile contracts won't kick-in until next year. The pair's tussle for customer numbers was perhaps illustrated most dramatically by their high-stakes battle over Premier League TV rights which saw Sky agree to shell out £4.1bn.

The jury's still out on whether consumers are really all that keen on quad-play though. In fact today Telefonica announced it has formally agreed a deal to sell its UK arm O2 to Three owners Hutchison Whampoa for £10.25bn. The pair have shunned broadband and TV so far and have shown little inclination to pursue it after the tie-up.

'Isn’t that two people in the playground saying mine’s bigger than yours? What’s the customer proposition?' O2 boss Ronan Dunne said to reporters in November. 'Do I see a massive lurch in the market to a converged offering? I don’t see any evidence of an appetite for that.' Of course it's not just about the customer proposition. Telco bosses hope that by tying users into more complex contracts they can reduce churn, the rate of customers who cancel their packages.

Dunne's counterpart's view is a little more measured. 'Longer term [quad play] depends on how hard companies push it,' Three's chief exec David Dyson told the FT in February. 'There doesn’t look like a huge demand but it depends on how aggressively people push it through discounting.'

Either way, the tie-up will reduce the number of full mobile networks from four to three, which some will see as an erosion of consumer choice. With BT's acquisition of EE still under the microscope, it seems the sector's M&A spree will be keeping the competition authorities and Ofcom busy for some time.

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