BT's acquisition of EE has been provisionally cleared by the Competition and Markets Authority (CMA), paving the way for the £12.5bn deal to be completed and see BT re-enter the mobile network space for the first time in over 10 years and in the process instantly become the UK's biggest mobile operator with 24.5m customers.
The CMA said the deal, which was first announced in February, was "not expected to result in a substantial lessening of competition" in the UK, which is generally considered to have a diverse and competitive mobile operator market, especially compared to some other European countries.
The takeover will more than treble BT's retail customer base and position the new firm as the leading quad-play operator in the UK, covering mobile, broadband, TV and fixed-line phones. In the wake of the announcement, BT shares jumped by five per cent.
"Having considered all the evidence, the group does not provisionally believe that, in a dynamic and evolving sector, it is more likely than not that BT/EE will be able to use its position to damage competition or the interests of consumers," said John Wotton, chair of the CMA inquiry.
Despite the provisional approval of the merger, BT may still be forced to break up its broadband business Openreach by Ofcom, with rivals TalkTalk and Vodafone both pressuring the communications watchdog to insist the internet unit is spun off to improve competition.
"Ofcom is still considering the future structure of BT as part of its digital communications review," said Matthew Howett, regulation practice leader at Ovum. "While Ofcome continues to stress that all options are being considered, it's felt that a full structural separation is likely to be disproportionate to fix any shortcomings of the current arrangement. We will know more in January 2016 when Ofcom is set to publish its initial conclusions."
The CMA's final report is also due in January, giving it a chance to consider responses to its provisional report, with the BT/EE deal expected to be fully finalised and approved in March 2016.