Yesterday The Sunday Times ran another story on BT buying a Mobile Network for £10bn. The story outlined the options faced by the CEO and his team without asking the questions a shareholder might want answered.
If the Mobile sector offers such riches to BT why are the two largest Networks prepared to pull up sticks and exit the market?
How do the Customers of EE or O2 overlap with those of BT and are they likely to remain given a change of ownership?
If BT were to buy either Network what will be the response of OFCOM when it comes to regulation?
After 14 years not managing Mobile Infrastructure Assets does BT have the Management expertise needed to make a return on the Investment given the vast changes over that period?
On the basis of just these questions then the rational response is thanks for the opportunity but I think BT is better served NOT doing the deal. Those likely to benefit from any deal in the short term will be Investment Bankers, Lawyers and Accountants who will be able to charge large fees for the transaction. In the medium term the beneficiaries are likely to be the rivals of BT.
If the deal were to work for BT it would have to be able to convince the Consumer that buying all your connectivity requirements from a single provider is worth paying a premium for rather than a discount. It would need to hire Executives capable of building and running Mobile Networks and then given them the space and power to do so rather than hamstringing them as a subsidiary of an Operating Unit. Whilst spending vast sums on Marketing and Engineering in the Mobile Business it would need to also do so in the Fixed Business or face Investigation and Sanctions by OFCOM and Politicians. These challenges are greater than those faced by the Board in the Dot.com era when failure saw the sale of Cellnet.