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BT has a long history in the mobile market that dates back to the days of BT Cellnet, the company that launched one of the world’s first GPRS (General Packet Radio Service) networks in June 2000. BT Cellnet eventually became O2, which was sold to Telefónica in 2005 for £18 billion. As demand for “quad-play” bundles (broadband, TV, landline and mobile) has grown, BT has been positioning itself to re-enter the consumer mobile market.
The company even explored the possibility of buying back O2, but instead made a £12.5 billion bid for the UK’s largest mobile operator, EE. That acquisition is still subject to regulatory approval. In the meantime, BT is preparing to launch a service called BT Mobile that will operate as an MVNO (mobile virtual network operator) using EE’s network under a wholesale agreement. That wholesale deal was signed before the takeover bid and the new MVNO will offer 4G connectivity from launch.
A price war will devalue their services and cause financial harm in the long-term
Gavin Patterson, Chief Executive of BT Group, has committed to making a renewed push into mobile during the current financial year. The initial launch is expected to be low-key and limited to existing BT customers, ahead of a broader marketing campaign later in the year.
Introducing BT Mobile will allow the company to promote full quad-play packages aimed at winning new customers. One of BT’s key differentiators is exclusive sports content: BT paid a record £897 million for Champions League and Europa League broadcasting rights, and it plans to use that premium content as a selling point against rivals such as Sky. Sky is also reported to be planning an MVNO in partnership with O2, potentially launching in early 2016.
A BT spokesperson said: “We’re very much on track to launch consumer mobile services this financial year. We will start by offering these new services to our existing customer base and will tell you more about them soon.”
At launch, BT Mobile will be offered on a SIM-only basis, without bundled handsets. Device offers may follow if and when the EE acquisition is approved, allowing BT to leverage EE’s established relationships with handset manufacturers and distributors.
Industry watchers expect BT’s plans to be competitively priced, undercutting many major rivals. However, insiders say BT will not necessarily match the lowest-cost providers such as Giffgaff and Three. The concern is that triggering an all-out price war could erode margins and devalue services in the long term, which would be particularly problematic if BT completes the acquisition of EE later in the year.
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