February 05 ,2015 | by Hari Sri

BT to buy mobile firm EE for £12.5bn

BT to buy mobile firm EE

Telecoms group British Telecom will pay £12.5 billion to buy mobile operator EE.

In a move that will create a communications giant, the telecoms group BT has finalised a deal to buy the mobile firm EE for £12.5 billion after it announced in December that it was in talks to buy the UK's largest mobile operator.

 

The current owners of EE, Deutsche Telekom and Orange, will be paid in a combination of cash and shares that will grant the two previous owners stakes of 12 per cent and four per cent in BT, respectively.

"This is a major milestone for BT as it will allow us to accelerate our mobility plans and increase our investment in them," said Gavin Patterson, CEO of BT.

The deal will hinge upon getting approval from current shareholders and from the Competition and Markets Authority, but Mr Patterson seemed to have no worries by saying that he expected the transaction will be passed by competition regulators without BT having to make any concessions.

 

Network simplification would mean cheaper deals

EE is currently the UK’s leading mobile network with 24.5 million direct mobile customers, but it might not hold that title for much longer. Recently Hutchison Whampoa, the owner of mobile rival Three, announced it was in talks to buy the second largest mobile network O2, a merging that would easily surpass EE’s position as the UK’s largest network.

Despite this rivalry, the acquisition of EE would see BT gain dominance in the communications sector as a whole, as it could combine the 4G network of EE with its superfast broadband network that would give it “greater scope for future investment and product innovation”.

"This is a very exciting time and a new chapter for BT," said Mr Patterson. He continued to indicate that the simplification of the network would translate into cheaper deals for customers. It was also noted that the merger would not reduce the number of competitors in the mobile sector, like the coming deal between Three and O2, and instead should act to keep prices competitive for consumers.

Hari Sri

Hari is the LSBF Blog's News Editor. He manages the editorial content on the blog and writes about current affairs, SME, entrepreneurship, energy, education and emerging market news.

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