Ofcom green lights BT’s bid to buy rival

BT has received a massive fillip in its bid to buy EE after the telecoms regulator appeared to quash competition concerns raised by the £12.5bn deal.

Rivals say the tie-up, which would bring together the largest provider of mobile, internet and home phone, would create an industry giant that would dominate the sector and stifle competition.

But Ofcom told the Competition And Markets Authority, which is scrutinising the deal, that those concerns were overblown.

Although the CMA will rule on the deal, it is expected to lean heavily on the advice of the industry regulator.

In a 65-page submission to the takeover body, Ofcom said: ‘Many of the competition issues that are potentially raised by the BT/EE merger are either covered by the existing regulatory measures we have taken or fall within the scope of these regulatory powers.’

But it warned that the resulting company would dominate what is known as ‘mobile backhaul’ – the part of the process where mobile signal passes through underground cables before being transmitted over the airwaves.

Because BT (up 1.85p at 456.2p) owns the largest network, rivals lease space pace on it to transmit t their phone calls and data such as emails. BT then buys space on its own network, putting it on an equal footing with rival firms. Ofcom cautioned that BT ‘may have the incentive to discriminate’ when selling network space to itself.

It also said that a separate deal where Three buys O2 – which will be assessed by European regulators – would reduce competition in the sector and could strengthen the case for intervening in the BT deal to protect consumers.

A spokesman for BT said: ‘ We welcome Ofcom’s submission to the CMA and that they have no major concerns. We’re confident that the acquisition is good for UK consumers and businesses.’