BT share price: Company says EE takeover to produce significant benefits for customers
BT Group Plc’s (LON:BT.A) proposed takeover of EE will create a “true UK digital champion”, according to the telecoms giant’s chief executive officer, Gavin Patterson. Yesterday, Patterson and EE’s CEO, Olaf Swantee, set out their arguments to support the acquisition, saying that a combination of the two companies would provide a significant boost to the UK digital sector.
“The world is changing with customers wanting access to the internet on their terms,” Patterson said in the press release. “They are spending more time online than ever before and they want the best connection whether they are at home, in the office or on the move. Seamless connectivity is the future and we are keen to deliver the new, innovative services of the future.”
BT’s takeover of the UK’s largest mobile operator has met vocal resistance from rivals such as Vodafone Group Plc (LON:VOD) and TalkTalk, who have warned that the deal could harm competition and lead to price increases. They have urged regulators to scrutinise the deal and force BT to spin off its infrastructure unit Openreach, and to see other concessions in areas like spectrum.
BT and EE dismissed those arguments,claiming that the combination would bring significant benefits, including continued investment in innovations such as ultrafast broadband and 5G. Swantee pointed to the deal that created his company – a merger between T-Mobile and Orange – and the benefits it had produced for consumers, such as the launch of the UK’s first 4G network. He argued that “consolidation has proven it can unlock investment” and warned that it would be dangerous to let “self-interested companies” block the deal.
“These competitors only want to put up roadblocks, while we want to build motorways for the UK,”Swantee said.
Patterson and Swantee spoke to industry analysts at an event to mark the launch of a BT-commissioned report about the impact that a BT/EE merger will have on the market. According to study, the combination will be well positioned to address some key trends in the digital sector such as the increasing demand for data and speed in fixed and mobile networks and the customers’ expectations of ubiquitous, seamless and reliable connectivity.
The report also claims that the market position of BT/EE would be “unremarkable by international standards”, with little change in the respective shares of the businesses separately. According to BT, following the acquisition it will control one third of the mobile market, and one third of fixed-line home broadband business in the UK – adding just three percent from EE to its existing 31-percent share.
TalkTalk disagreed with the report’s conclusions regarding the market position, estimating that a combined BT/EE will have 40 percent of revenues for fixed and mobile services sold to consumers, and 70 percent of the wholesale market. “Quite simply, consolidation leads to reduced competition and a reduced incentive to innovate and, crucially, higher prices,” a spokeswoman for the telecoms firm said yesterday.
In today’s trading, BT shares were marginally down at 450.65p, as of 08:09 BST. The stock has risen 12.3 percent since the start of the year and the company’s market capitalisation currently stands at £37.6 billion.
The 18 analysts offering 12 month price targets for BT have a median target of 519.00p, with a high estimate of 600.00p and a low estimate of 355.00p. As of June 12, 2015, the consensus forecast amongst 23 polled investment analysts covering BT had it that the company will outperform the market. This consensus estimate has been maintained since November 5, 2013 when the sentiment of investment analysts improved from “hold”.
As of 11:15 BST, Thursday, 18 June, BT Group plc share price is 449.20p.