Yahoo Finance BT pushes ‘EE’ brand in plan to sell fridges and insurance
BT has begun to abandon its own brand in favour of EE and will start selling fridges and insurance in an attempt to shake up a stagnant telecoms market.
It unveiled a new service and smartphone app, dubbed EE ID, which will allow consumers to buy a broader range of products and services regardless of their telecoms provider.
As well as enabling customers to manage their mobile and broadband subscriptions, it will offer gaming consoles, kitchen appliances, home security systems and insurance to anyone.
The move, spearheaded by BT Consumer chief executive Marc Allera and the result of major reengineering of the operator’s technological plumbing, is also designed to deepen the pool of potential subscribers.
The shift delivers another nail in the coffin for the BT brand, two years after the telecoms group said EE would become its flagship brand. The company will continue to offer BT broadband and landline services, but customers will be encouraged to switch to EE.
It is likely to reignite suggestions that BT could seek to spin off its consumer business as a separate company to unlock value for shareholders. Such a radical restructure may be simpler than a much-speculated sale of the network arm Openreach, which is closely entwined with BT’s £50bn pension scheme.
Mr Allera said: “As the UK’s largest subscription business, we’re evolving to play a much more important role in customers’ lives.”
Efforts to expand into new areas risk echoes of previous failed attempts by telecoms companies to move into adjacent sectors.
AT&T last year offloaded media giant Time Warner just four years after its disastrous $85bn (£70bn) takeover, while French network operator Orange in June said it will withdraw from the retail banking market after losing more than €1bn (£870m) on the venture in six years.
BT itself also came under criticism for its expensive move into sports broadcasting. Mr Allera sold a 50pc stake to the US broadcaster Discovery and has signalled plans to exit completely in the coming years.
Karen Egan, head of mobile at Enders Analysis, said EE’s expansion in consumer electronics was relatively low risk and that the new customer app could help EE to strip out costs from back-office operations such as call centres.
She added: “They’re not betting the house on it, but it’s a sensible move in the right direction.”
EE is the UK’s second-largest mobile network operator by customer numbers behind Virgin Media O2. Vodafone and Three are currently in talks over a £15bn merger that would create the largest player in the market.
Kester Mann, an analyst at CCS Insight, said the move was “clearly an attempt by EE to lure customers from rivals”, but said it was not clear how the company planned to do so.
He added: “Today’s update won’t quell mounting questions over whether telecom operators can monetise their networks, compete with big technology companies and rejuvenate financial performance.
“But EE at least appears to recognise its challenges and the changes outlined feel like a step in the right direction.”
EE has already enjoyed some success with the sale of games consoles such as Xbox and PlayStation, and is hoping to copy this strategy with a wider range of products from running machines to fridges.
The push is the brainchild of Mr Allera, who joined BT when it bought EE in 2016. He was widely viewed as a frontrunner to take over the top job from Philip Jansen at the end of this year but lost out to Allison Kirkby, one of the company’s non-executive directors.
Ms Kirkby, BT’s first female boss, will join at a turbulent time for the former telecoms monopoly, which has acquired an agitating top shareholder in Patrick Drahi, a French billionaire. He is understood to have supported Mr Allera in his bid to become BT chief executive.
The company is planning to cut up to 55,000 jobs by the end of the decade as part of a broader plan to reduce costs by £3bn. BT’s share price has slumped by more than 50pc over the last five years and its market value is now less than the £12.5bn it paid for EE.
