BT Group has finalised a £12.5bn deal to buy EE, the UK’s largest mobile phone network, after weeks of negotiations.
Gavin Patterson, BT’s chief executive, said the deal was a “major milestone” for the former state-owned telecoms company, accelerating its foothold in the mobile market.
The combination of the two companies will cement BT’s status as the dominant force in UK telecoms, merging Britain’s most-advanced mobile 4G network with the company that owns and operates the UK’s biggest telecoms and broadband network.
Olaf Swantee, EE chief executive, said the deal was good news for Britain: “Today’s announcement will ensure the UK remains at the forefront of the mobile revolution, bringing even more innovation and investment in world leading connectivity for our customers.”
Under the terms of the deal, BT will pay EE owners Deutsche Telekom and Orange a combination of cash and shares. It will leave Deutsche Telekom - Germany’s partly state-owned telecoms company – with a 12% stake in BT, while Orange will hold a 4% stake.
The agreement also entitles Deutsche Telekom to appoint one non-executive member of BT’s board.
A spokeswoman for BT said it was “too early to speculate” on whether the deal would lead to job losses, but added that the company had a record of hiring people to support its investments.
She also said it was too early to say which individuals would fill specific roles in the new enlarged organisation.
Patterson said: “The UK’s leading 4G network will now dovetail with the UK’s biggest fibre network, helping to create the leading converged communications provider in the UK. Consumers and businesses will benefit from new products and services as well as from increased investment and innovation.”
Patterson said he expected the deal to be approved by the competition and markets authority, without having to change the terms.
However Vittorio Colao, the chief executive of rival Vodafone, said the deal required more scrutiny, and that a spin-off of BT’s Openreach, which is rolling out superfast fibre broadband in the UK, would be optimal.
BT revealed in December it was in exclusive talks to buy EE, which has 31 million customers and the largest 4G customer base of any operator in Europe.
BT expects the combination of the two companies to lead to £360m of annual savings in the fourth full year after the deal completes, which is expected to be before the end of BT’s 2015/16 financial year on 31 March 2016.
In November last year, BT said it was in talks to buy O2, the mobile network from which it had demerged in 2001. The demerger was subsequently characterised as one of the worst strategic errors in UK corporate history.
