BT thinks EE customers will FLEE from enlarged four-play mobe biz
And mobile prices might fall as well. Still wanna vote for it?
BT has warned its shareholders that a tumble in mobile prices is a factor that has to be considered ahead of voting to agree the £12.5bn purchase of EE.
In a 104-page circular of legalese (PDF) sent to BT shareholders, the telecoms behemoth recommends that shareholders vote to agree the deal.
The company says that this is part of its “investing in five strategic growth areas [strategy]: fibre; TV and content; mobility, and future voice services”.
Its rivals might take a dim view of this, wanting the Openreach fibre to be prised out of BT’s hands. This scenario isn't listed in the possible risks.
It warns that mobile prices are dropping and it expects them to continue to drop because “increased competition has led to a decline in the prices which EE charges for its mobile services and is expected to lead to further declines in pricing in the future. Competition could also lead to a reduction in the rate at which EE and, following Completion, the Enlarged Group adds new mobile customers”.
It goes on to say that EE customers may well leave as there “is a risk that the churn rate of EE customers [will be] increased as a result of the transition away from the legacy T-Mobile and Orange brands, and any potential changes to the branding in future, following Completion”.
This is a polite way of saying the Everything Everywhere name is a bit rubbish and engenders no loyalty.
The document also talks about fixed-mobile convergence without mentioning the word “Quadplay”, breaking it down as “BT expects to generate revenue synergies by providing a full range of communications services to the combined customer base".
"This includes selling BT’s broadband, fixed telephony and pay-TV services to those EE customers who do not currently take a service from BT," it added.
Staff might quake at the “efficiencies” target for the merger which, repeating the information BT gave out just after the deal was announced, claims that “acquisition is expected to generate significant operating cost savings and additional capex savings".
"Together, these are expected to reach approximately £360m per annum in the fourth full year post-Completion. Integration costs to achieve these savings are expected to be around £600m. The savings are equivalent to a net present value of around £3.5bn before integration costs, or around £3.0bn after integration costs," it added.
BT, however, warns of “potential difficulties”. These include mixing the business cultures, regulatory systems and pay scales, the technical issues of combining networks, and some EE customers walking away as a result of the merger.
It needs to be remembered that the EE network is itself a merger of the Orange and T-Mobile networks, something which we at El Reg suspect led to some security flaws we uncovered last year.
Despite all the risks BT expects the consumption of EE – or whatever it may be renamed – to make the company a cool £1.6bn a year. ®