BT in talks to acquire UK’s largest mobile network, EE, for £12.5 bn

BT is in talks to acquire Britain’s largest mobile network group, EE, for £12.5 billion. The period of exclusivity is said to last several weeks for negotiations to be carried out.

Last month the British telecom giant said that it was interested in either acquiring EE or the Spanish firm owned by Telefonica, O2.

In a statement BT said that “the proposed acquisition would enable BT to accelerate its existing mobility strategy,”

EE is the UK market leader in 4G, boasting over 24.5 million customers, and holding 33.8% of the UK mobile market by revenue, according to Citigroup.

The deal would give the owners of EE, Germany’s Deutsche Telekom and France’s Orange, a 12% and 4% stake respectively in BT.

In addition, Deutsche Telekom would be allowed to appoint a member to the board.

When the deal goes through the result would be a communications giant that provides broadband, mobile, TV, and fixed-line phones.

Other major mobile network groups in the UK, such as Virgin and Vodafone, are all paying close attention of the potential acquisition.

One of the major concerns is that if BT ends up operating a mobile network it would also control its piping business – which links mobile transmission masts with the networks of mobile operator’s.

BT said that it expects the deal to present “significant synergies”, with savings on IT and **back office costs. It will also be offering its fixed-line services to EE customers who haven’t already opted for the service.

** Back office refers to the part of a company where personnel are rarely seen by customers or the general public.

EE shop

An EE shop in Leeds. EE has operates 500 retail stores in the UK. 

Back in 2002 BT spun off its mobile network, called BT Cellnot (now O2). In 2005 it was bought out for £17.7 billion by Telefonica.

According to the BBC, a communications analyst at CCS Insight, Paolo Pescatore, said that the acquisition is likely to face scrutiny from Ofcom – the telecoms regulator.

“It combines the UK market-leader in fixed-line with the number one mobile operator. We believe it is unlikely that Ofcom would block the deal, but the combined entity could be forced to dispose of some spectrum .”

In a press release BT said:

“The exclusivity agreement does not require the parties to enter into a transaction and there can be no assurances that one will occur. If a transaction is agreed, approval by BT’s shareholders will be required as a condition of the purchase.

References:

  1. “BT enters into exclusive negotiations to acquire EE” – 15 December 2014 – BT Group plc
  2. “BT in talks to buy EE for £12.5bn” – 15 December 2014 – BBC

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