BT buys EE for £12.5bn to create communications giant

05/02/2015

BT has bought the UKs largest mobile operator EE for £12.5bn as the telecoms firm expands into the lucrative ‘quad play’ sector to take on Sky.

The deal brings together BT's more than 10 million retail customers and EE's 24.5 million direct mobile subscribers.

BT said that by combining EE's 4G network with its extensive superfast broadband network it would have greater scope for future investment and product innovation.

The group plans to sell a full range of its services to the combined customer base, including BT offering broadband, fixed line and pay-TV services to those EE customers who do not currently take a service from it.

However, rivals have already called on regulators to intervene, wary that the fixed-line market leader and main infrastructure provider could abuse its position and reduce competition.

The group had announced in December that it was in talks to buy EE and BT had spent the last few weeks in exclusive talks with the owners of EE, Orange and Deutsche Telekom, about a deal. The German and French companies will hold 12 percent and 4 percent stakes in BT, respectively.

The deal, which BT said would create the UK's leading communications provider, will be partly financed by a £1 billion share issue.

BT expects to achieve combined operating cost and spending synergies of around £360 million a year in the fourth year after the deal completes.

BT's CEO 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."

However this position is under threat as Hutchison Whampoa, owner of rival Three, is in talks to buy number two operator O2.

Patterson said he expected the transaction to be passed by competition regulators without BT having to make any concessions and that, if it avoids an in-depth probe, it should be complete by the end of the summer.

He said the deal did not reduce the number of mobile networks available in the UK and was consistent with telecoms firms in Europe which also had both fixed and mobile operations.

The chief executive said the question of whether EE's 580 shops would be re-branded was "something we'll look at more around completion" though he added: "Initially, we'll keep the EE brand."

Patterson said the money being spent on the deal did not affect its plans ahead of the imminent Premier League rights auction as it limbers up for an expected multibillion-pound battle with rival Sky.

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