BT has confirmed it will acquire EE in a move that will scare the beejeesus out of the UK mobile market.
Buying EE will give BT the biggest 4G network in the UK which it is says will complement its fibre network.
BT had been using EE’s network for its mobile virtual network operator deal, but hopes the deal will enable it to create a complete network for its customers so they are using its services, whether at home on fixed connections or on the go using the mobile services, or its existing WiFi services.
It also gets 24.5 million customers currently on the EE network.
We expect to see deals involving telephone, mobile phone, broadband and mobile services in one bundle.
BT accountants already think that they will save a pile through network and IT rationalisation as well as in areas of procurement, marketing and sales costs.
Still it is bad news for O2 which was touted to be the other company that BT was thinking of buying. The decision not to go with O2 will be a blow to the Spanish Telefónica which had been keen to flog its business unit in the UK.
If approved the deal will mean Deutsche Telekom as a 12 percent share in BT and a seat on the company’s board. Orange will take just a four percent share and will not have a seat on the board.
It is not all clear sailing though. The deal has to be approved by the Ofcom regulator. While it is not likely to block the deal, the combined entity could be forced to dispose of some spectrum. BT’s Openreach and Wholesale units might have to be hived off from the main company.
The chief executive of struggling telecom equipment maker Alcatel – Lucent is leaving the company. Ben Verwaayen took the helm four years ago and tried to return the outfit to profit. He failed.
Alcatel – Lucent posted a $1.85 billion loss for 2012, compared to a $1.49 billion gain in 2011, so Verwaayen’s departure should come as no surprise. Verwaayen announced his decision to step down in a statement Thursday, saying that now is the appropriate moment for Alcatel – Lucent to seek new leadership.
“Alcatel-Lucent has been an enormous part of my life. It was therefore a difficult decision to not seek a further term, but it was clear to me that now is an appropriate moment for the Board to seek fresh leadership to take the company forward,” said Verwaayen.
Philippe Camus, Chairman of the Alcatel-Lucent Board, said: “After due reflection, the Board has accepted Ben’s decision to step down as CEO.” Camus went on to thank Verwaayen for his efforts to stabilise the company over the past four years.
It remains unclear who will replace Verwaayen and he is likely to stay on until a successor is found. The company said it would consider in-house candidates as well as candidates from outside the company.
Although Verwaayen did not manage to turn things around, he can hardly be blamed for Alcatel – Lucent’s woes. The company was created following a $11.6 merger of Lucent Technologies and Alcatel in 2006. It has been downhill ever since. Verwaayen, the former head of the BT Group, joined the company in 2008, after the previous American-led management was ousted.
Alcatel – Lucent has been trying to restructure and reposition itself in the telecom infrastructure market, but so far it did not have much luck competing against the likes of Ericsson and Huawei.