Talktalk Telecom : response to the CMA’s final report on the BT/EE merger

15/01/2016

We are disappointed, although not surprised, that the CMA has waived through the BT/EE merger, even though the new entity will be even more dominant than it was before privatisation 30 years ago. Given BT Group's increased size and scale, the need to ensure that the UK's broadband infrastructure is not neglected is more important than ever, and we have every confidence that Ofcom will take this into account when considering the future structure of Openreach.

It is dangerous that the regulator has looked at this merger in isolation, given the unprecedented levels of consolidation taking place in the wider telecoms industry. The UK has long been one of the most competitive markets in Europe, but if the Three/O2 merger also goes through, this would end. Indeed, if the experience of other European markets such as Ireland and Austria is any guide, moving from four to three mobile providers will lead to price increases of 25% or more.

As the CEO of Ofcom recently put it, 'competition, not consolidation, drives investment and delivers low prices'. However, BT will now control over 45% of the UK's spectrum and 40% of the consumer telecoms market, while a combined Three/O2 would have 40% of the mobile market. Three's entry into the market 16 years ago was designed to spur competition and drive down prices - a role it fulfilled magnificently. Now it will become the incumbent, with a greater incentive to protect market share instead of driving market disruption.

Thanks to a thriving, competitive telecoms market, UK consumers enjoy some of the fastest speeds and lowest prices in Europe. There is a real risk that today's announcement is the first step towards a slower, stagnant digital future.

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