Shareholder boost from BT/EE tie-up

BT’S multi-billion-pound takeover of mobile network EE has been approved by the competition watchdog in a deal which experts say could be lucrative for shareholders.

The telecoms giant, which has 10m customers, got the thumbs up from the Competition and Markets Authority yesterday for its £12.5bn acquisition of EE, which has 27m.

The tie-up allows BT (down 3.7p to 463.3p) to offer so-called quadplay, where it will provide four services – mobile, home phone, television and broadband services – to its customers in one bundle.

Analysts have said the takeover should be welcomed by investors, with BT expected to continue its practice of increasing its dividend.

In its most recent results the company announced a dividend of 4.4p, an increase of 13pc.

Will Draper, telecoms analyst at Mirabaud Securities, said: ‘BT has predicted its dividend for 2015 will go up by between 10pc and 15pc, I would predict that it could reach towards the top of that range, at 14.2p or 14pc. And for 2016 I think we could see the dividend rise to 15.6pc, a further 10pc increase.’

But the merger has drawn criticism from rivals who fear it gives an unfair advantage to the telecoms company, which also owns Openreach, the broadband network. The CMA received 70 submissions during its probe into the merger. TalkTalk said it was disappointed by the result and that ‘the new entity will be even more dominant than it was before privatisation 30 years ago’.

Chief executive of Virgin Media Tom Mockridge noted: ‘In many jurisdictions this acquisition would have had at least some conditions attached.’

The CMA cleared the deal on the grounds BT’s main operations in broadband and television do not overlap with EE’s mobile business. The deal is expected to complete on January 29. EE’s chief executive Olaf Swantee will step down.