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BT to buy mobile firm EE for £12.5bn | BT to buy mobile firm EE for £12.5bn |
(about 1 hour later) | |
Telecoms group BT has bought the mobile operator EE for £12.5bn. | Telecoms group BT has bought the mobile operator EE for £12.5bn. |
The takeover creates a communications giant covering fixed-line phones, broadband, mobile and TV. Existing EE shareholders Orange and Deutsche Telekom will sell 100% of their shares. | The takeover creates a communications giant covering fixed-line phones, broadband, mobile and TV. Existing EE shareholders Orange and Deutsche Telekom will sell 100% of their shares. |
Deutsche Telecom will hold 12% in the new combined business and have a seat on the board. | Deutsche Telecom will hold 12% in the new combined business and have a seat on the board. |
Orange will receive a 4% stake, as well as about £3.4bn in cash. | Orange will receive a 4% stake, as well as about £3.4bn in cash. |
BT says it plans to raise £1bn through a placing of new shares to fund the deal. | BT says it plans to raise £1bn through a placing of new shares to fund the deal. |
It said in a statement: "The combination of EE and BT will provide customers with innovative, seamless services that combine the power of fibre broadband with wi-fi and advanced mobile capabilities." | |
Savings and revenues | Savings and revenues |
EE leads the market in 4G, the fastest mobile bandwidth. It said on Thursday its 4G customer base had risen to 7.7 million subscribers. | |
EE chief executive Olaf Swantee said: "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." | |
BT says that within four years, the deal will be saving it £360m a year in terms of operating costs and capital investment. | BT says that within four years, the deal will be saving it £360m a year in terms of operating costs and capital investment. |
It added that by combining the two businesses, it should be able to generate an extra £1.6bn a year in sales. | It added that by combining the two businesses, it should be able to generate an extra £1.6bn a year in sales. |
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." | 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." |
He said the money being spent on the deal did not affect its plans ahead of the multi-billion pound Premier League rights auction, where it is in tough competition with rival Sky. | He said the money being spent on the deal did not affect its plans ahead of the multi-billion pound Premier League rights auction, where it is in tough competition with rival Sky. |
BT shares rose more than 2.5% on the London market, making the firm the top gainer on the FTSE 100 index. | BT shares rose more than 2.5% on the London market, making the firm the top gainer on the FTSE 100 index. |
Consolidation | Consolidation |
The mobile phone market is expected to consolidate further. Hutchison Whampoa, which owns rival Three, is said to be in talks to buy O2. | The mobile phone market is expected to consolidate further. Hutchison Whampoa, which owns rival Three, is said to be in talks to buy O2. |
There has been speculation that Virgin may tie up with Vodafone. | There has been speculation that Virgin may tie up with Vodafone. |
And Sky has also announced the launch of its own mobile service, through a deal with O2's network. | And Sky has also announced the launch of its own mobile service, through a deal with O2's network. |
Dan Ridsdale, analyst at Edison Investment Research, said: "In the space of a few months, the UK telecoms landscape has changed enormously. As the majors fill in the gaps in their offerings, competition to offer multi-play bundles is going to step up significantly. | |
"Whether this will be beneficial for consumers is a very different question. The bundling of services makes it much more difficult to compare pricing, while more premium TV content is likely to move away from free to air." | |
The BT-EE deal is expected to be finalised by March next year, subject to approval by shareholders of BT and scrutiny from the Competition and Markets Authority. | The BT-EE deal is expected to be finalised by March next year, subject to approval by shareholders of BT and scrutiny from the Competition and Markets Authority. |