Lisa Bachelor 

How does BT’s purchase of EE affect me?

BT has just spent £12.5bn acquiring the mobile provider, but what will this mean for the customers of both firms?
  
  

BT  buys EE
How will BT’s deal with EE affect the customers of the two companies? Photograph: Andy Rain/EPA Photograph: Andy Rain/EPA

BT has finalised a £12.5bn deal to buy EE, the UK’s largest mobile phone network.

I’m a customer. When will I notice any changes?

It will be business as usual for quite some time. Assuming the takeover is approved by shareholders and by the Competition and Markets Authority, BT said it plans to complete it before the end of the next financial year (March 2016).

What will happen then?

The group plans to sell a full range of its services to the combined EE/BT customer base, including BT offering broadband, fixed line and pay-TV services to EE customers who do not currently buy a service from it. It is also expected to offer mobile deals to its own customers who take one or more of its services.

It is likely to be particularly keen to target customers with a bundle deal – all these services in one package. Talk Talk and Virgin Media already do this and EE has just started with the launch of a TV service.

However, mobile and broadband experts don’t think BT will launch this immediately but will instead try to cross-sell individual products to its existing customer base. “I think they will start by trying to cross-sell EE mobile customers BT broadband and vice versa,” says Gautam Srivastava, communications expert at Moneysupermarket. “The appetite for quad play [mobile, phone, broadband and TV in one package] is not there yet as I think people are still more concerned about price for each individual element. So BT is unlikely to make big changes too quickly.”

Are BT and EE prices likely to fall as a result of the merger?

That’s the $64,000 question and one which experts seem divided on.

“Fewer players in any essential market is rarely good for consumers,” said Which? executive director Richard Lloyd. “The competition authorities must now look at both the proposed mergers [that of 02 and 3 as well] and the market in the round to make sure that consumers are protected from unfair price increases or poorer service as a result of less competition.”

However, Srivastava thinks that prices will come down. “BT can’t say – as it has done today – that the deal will result in savings of £360m a year without passing on some of those savings to consumers.”

Ernest Doku, telecoms expert at uSwitch believes the jury is out. “When the mobile market in Austria contracted from four players to three, prices went up. However, the market in Ireland recently contracted and so far there has been no evidence of prices going up.”

Price aside, what are the other benefits or otherwise of BT taking over?

There is a suggestion that BT will have to offer more than just price to its new and existing customers.

“BT is likely to do something to incentivise EE customers to take its other services and i think that is likely to be something like giving EE mobile customers the hugely popular BT Sport for free as part of a package,” says Srivastava.

EE will also be under increased pressure to launch a decent incentive to replace the highly popular cinema deal, Orange Wednesdays, that it is scrapping at the end of this month.

“At a time when customers have ‘handset fatigue’, meaning they are not so interested in handsets any more, elements like coverage, customer service and price are paramount,” says Doku. “Customers are going to ask, what compelling benefits will you get with EE over other networks? It will be interesting to see how EE, or BT in the future, plans to replace Orange Wednesday.”

What will happen to EE’s legacy customers, those with Orange and T-Mobile?

Some customers of EE are still with on Orange and T-Mobile tariffs from before the brands were bought by EE. As these customers come to the end of their 3G contracts EE is trying to retain them by switching them on to its 4G deals, often offering them cheap broadband to go with it. BT is likely to do more of the same, possibly with enhanced offers, as it won’t want to lose these customers.

Am I likely to get good customer service through a BT takeover?

If BT and EE want to compete on customer service both need to up their game. Both fare badly on that front. In the latest Ofcom survey of customer satisfaction BT scored badly in the landline section, achieving 61%, below the satisfaction rating of Virgin, Sky and Talk Talk customers and below the sector average of 67%.

It also achieved the lowest score for fixed broadband provider when compared with Virgin, Sky and Talk Talk. “They [BT] also performed below average on specific customer service measures including speed and ease of getting through to the right person, time taken to handle issues and offering compensation or a goodwill payment,” Ofcom said.

EE meanwhile, came out worst for mobile network provider, scoring 69% which put it just below Vodafone and 3 and well below O2 and Virgin.

Mergers often cause more problems with customer service intitially as companies have to deal with extra call volumes and changes in billing.

 

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