BT seals £12.5bn acquisition of EE

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Deal expected to be completed in March 2016 and will see BT enter the quad play market, with telecoms giant claiming it will lead to the creation of a world-class digital infrastructure

BT has agreed “definitive” terms to acquire EE for £12.5 billion. The deal is expected to be completed by March 2016, provided it passes all regulatory approval.

The deal will be made up of a combination of cash and BT ordinary shares issued to both Deutsche Telekom and Orange.

Deutsche Telekom will hold a 12 per cent stake in BT and will be able to appoint one non-executive member of the BT Board of Directors. Orange will hold a four per cent stake in BT.

The agreement on terms comes less than two months after BT announced on December 15 that it had entered into exclusive discussions regarding a possible acquisition of EE.

BT said that by combining what it labels the “most advanced 4G network and most extensive superfast broadband network”, it will have greater scope for future investment and product innovation.

It expects to generate revenue synergies with a total net value of around £1.6 billion and said it can achieve this in two ways.

First by providing a full range of communications services to the combined customer base, including selling its broadband, fixed line and TV services to those EE customers who don’t currently take a service from BT.

Secondly by accelerating the sale of converged fixed-mobile services to its existing consumer and business customers and offer new services, using both companies’ product portfolios, skills and networks.

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. 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.

“The deal provides an attractive opportunity for BT to generate considerable value for shareholders, with significant operating and capital investment efficiencies supported by our tried and tested cost transformation activities. The enlarged BT will offer significant opportunities for employees as we lead the creation of a world-class digital infrastructure for Britain.”

EE chief executive Olaf Swantee
EE chief executive Olaf Swantee

EE chief executive Olaf Swantee added: “Joining BT represents an exciting next stage for our company, customers, and people. In the last few years alone, we have built the UK’s biggest, fastest and best 4G network, significantly advancing the digital communications infrastructure for people and businesses across 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.”

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