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.
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.
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, , Editor-in-Chief, Light Reading