BT Offers $19.5B to Buy EE

BT has weighed up its mobile acquisition options and decided it wants to buy the UK's leading mobile operator EE, for which it's prepared to pay £12.5 billion (US$19.5 billion) in cash and stock.

The UK incumbent fixed-line carrier had also been considering Telefónica UK Ltd. (O2 UK), but EE always (in Light Reading's eyes) looked to be the best option. (See Why BT + EE Makes More Sense.)

EE, which has 24.5 million customers (excluding MVNO and M2M connections), is currently jointly owned by Deutsche Telekom AG (NYSE: DT) and Orange (NYSE: FTE), which would each get an unspecified mix of cash and newly-issued BT Group plc (NYSE: BT; London: BTA) shares. If the transaction goes through, Deutsche Telekom would hold a 12% stake in BT and could appoint one member to BT's Board of Directors, while Orange would hold a 4% stake in BT.

BT is stressing that it has more due diligence work to do, and that the terms and conditions of any deal might change. There is also no guarantee that the deal will happen at all, and there seems little doubt that BT would have to jump through a lot of hurdles to complete such a deal, which would face a lot of opposition from the UK's other mobile players.

That's because if BT completes this deal, it would instantly become the UK leader in both fixed broadband (a position it already enjoys) and 4G, as EE is the clear LTE leader, with more than 5.6 million 4G users.

For more coverage of the strategic pressures and opportunities facing operators and vendors in the communications market, see our Business Transformation content channel here on Light Reading.

Although BT owns some UK spectrum and has launched a fixed/mobile convergence service, the acquisition of EE would propel the UK incumbent back into the full mobile services market for the first time since it spun out its cellular unit in 2001. Ironically, that mobile business eventually became O2 UK -- the mobile business it is spurning in favor of EE. (See BT Embraces Small Cells for Mobile Push.)

The news was announced after the London Stock Market closed. BT's stock ended the day's trading at 398 pence.

— Ray Le Maistre, Circle me on Google+Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

danielcawrey 12/15/2014 | 7:27:39 PM
Re: A bold move but how likely? That's a lot of scale – and a lot of money. 

Many companies have to go big, because going small doesn't get the desired effect of boosting revenue or margins. That's just the reality of being a big organization. 
[email protected] 12/15/2014 | 3:40:33 PM
Re: A bold move but how likely? I think BT needed the scale and it wanted as much 4G action as it could get.

It will have already done 'regulatory due diligence' - more than any other company, BT knows how the regulator, Ofcome, works. Maybe even more so than Ofcom...
cnwedit 12/15/2014 | 3:22:19 PM
A bold move but how likely? In the "go big or go home" department, this makes a world of sense. But would it have been safer to go smaller?
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