BT acquires EE - Machina Research's view

This morning (5^th February) BT announced that it was buying mobile operator EE, properly re-entering the UK mobile sector for the first time since spinning off mmO2 in 2002. Obviously this has set into overdrive speculation about what the strategy of the new company might be. Here we thought we would take a look at the implications specific to M2M.

So, what now for BTEE in the M2M market?

It is safe to say that Everything Everywhere was not a leading provider of M2M solutions. Its M2M capabilities were tucked away in its wholesale team. It has historically been hamstrung by its geographical limitations (i.e. a single country footprint) and the fact that both of its parents had ambitious aims for their own M2M business units. These factors limited the opportunity that EE was able to address, and therefore its ambitions in M2M. The new structure still sees Deutsche Telekom and Orange as parents, but with much reduced holdings in the new BTEE, meaning that we would expect them to have little or no influence on M2M strategy. So, to a certain extent, the gloves are off for BTEE in the cellular M2M market. It should be better able to pursue international opportunities than EE alone could do, although it is still somewhat hamstrung by a lack of facilities-based capabilities outside of the UK. However, and this shouldn’t be underestimated, it now has access to a very large base of global enterprise customers through BT (an asset that Orange, for instance, has been adept at using to grow its M2M business), as well as systems integration capabilities in BT Global Services. So, the combined BTEE enterprise M2M offering could look very interesting indeed.

Turning to the consumer side for a moment, the impact would seem to be minimal. Whatever plans BT might have had for connected home are unlikely to be significantly affected by its acquisition of what is ostensibly a mobile operator. That said, we do expect a more concerted effort on home automation from BT some time in the near future.

This development also, obviously, changes BT’s technology roadmap, with some significant implications for M2M-related deployments. BT have been dabbling with deploying a Low Power Wide Area (LPWA) network for a while. It has also be flirting with various smart cities schemes. The acquisition of a WWAN network clearly affects both of these. Now they have the potential to get serious with both, not necessarily because the fundamentals of the situation have changed much, but because much uncertainty has gone away so allowing them to make a better strategic plan for smart cities and LPWA in a more predictable context. They also have an in-house alternative backhaul network should they choose to pursue the LPWA route.

All of this said, M2M is probably at about #96 on BT’s list of priorities in this highly disruptive move for all concerned. So we wouldn't expect much to change imminently. The impact in the short-term will be minimal.