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Telecoms giant to re-enter mobile market

BT in exclusive £12.5 billion talks to acquire EE

BTBT is in exclusive talks with Deutsche Telekom and Orange to acquire their EE mobile network in a deal worth £12.5 billion.

The telecoms giant says the talks are likely to last several weeks allowing BT to complete its due diligence and for negotiations on a definitive agreement to be concluded.

A deal with EE would give BT 24.5 million added customers and propel it back into the mobile sector after it sold what is now O2 to help pay down a massive debt.

It sees mobile as a vital missing cog in bringing the full range of telecoms services to customers – broadband, wi-fi and 4G. BT would own the UK’s most advanced 4G network, giving it greater control in terms of future investment and product innovation.

The company is also now a broadcaster and successfully launched BT Sport as a rival to Sky Sport.

BT said that in parallel with the talks it will continue to work on its own plans for providing enhanced fixed-mobile converged services for businesses and consumers, in line with previous announcements. It remains confident of delivering on these plans should the deal with EE, or alternatively Telefonica for the O2 business, not take place.

The key headline terms, which are non-binding, include a purchase price of £12.5bn for EE on a debt/cash free basis.

Following the transaction, Deutsche Telekom would hold a 12% stake in BT and would be entitled to appoint one member of the BT board. Orange would hold a 4% stake.

BT expects significant synergies mainly through network and IT rationalisation, back-office consolidation and savings on procurement, marketing and sales costs. In addition, BT expects to generate revenue synergies through selling fixed-line services to those EE customers who do not currently take a service from BT, and by accelerating the sale of converged fixed-mobile services to BT’s existing consumer and business customers.

In a statement, the company 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.”

EE reproted adjusted EBITDA of £1.58 billion for the year to 30 June.

 

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