BT has bought EE for a whopping £12.5bn

BT has finalised a £12.5bn deal to buy EE, Britain’s largest mobile network, from Deutsche Telekom and Orange. Talks over the tie-up have been going on since December but reports on Wednesday night suggested an agreement has been reached and an announcement could be made as soon as this morning.

The takeover creates a communications giant, covering fixed-line phones, broadband, mobile and TV. Existing EE shareholders Orange and Deutsche Telekom will sell 100% of their shares. Deutsche Telekom will hold 12% in the new combined business and have a seat on the board. Orange will receive a 4% stake, as well as about £3.4bn in cash.

The deal combines BT’s 10 million retail customers and EE’ 24.5 million direct mobile subscribers.

BT’s shares rose almost 5% to their highest level since 2001, the year the company withdrew from mobile operations by selling O2.

BT says it plans to raise £1bn through a placing of new shares to fund the deal.

It said in a statement: “The combination of EE and BT will provide customers with innovative, seamless services that combine the power of fibre broadband with wi-fi and advanced mobile capabilities.”

EE leads the market in 4G, the fastest mobile bandwidth. It said on Thursday its 4G customer base had risen to 7.7 million subscribers.

EE will make BT a market leader in the UK 4G mobile market

EE will make BT a market leader in the UK 4G mobile market

EE chief executive Olaf Swantee said: “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.”

However, rivals TalkTalk and Vodafone have already said BT is grabbing too much of the market and have called for regulators to force BT to spin off its Openreach fixed line division, which enables other telecoms companies to access its network.

BT says that within four years, the deal will be saving it £360m a year in terms of operating costs and capital investment.

It added that by combining the two businesses, it should be able to generate an extra £1.6bn a year in sales.

BT chief executive Gavin Patterson said: “This is a major milestone for BT as it will allow us to accelerate our mobility plans and increase our investment in them.”

He said the money being spent on the deal did not affect its plans ahead of the multi-billion pound Premier League rights auction, where it is in tough competition with rival Sky.

Source:

BBC Tech

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