Telecoms giant BT is in exclusive talks to buy EE – Britain’s largest mobile network group – for £12.5bn.
It said the period of exclusivity would last “several weeks” to enable it to carry out the necessary negotiations. In late November, BT said it was in talks to buy either EE or O2, which is owned by Spanish firm Telefonica.
Vodafone, Sky, Virgin, Talk Talk and 3 – the other major players in this market – will all be watching developments closely.
EE leads the market in 4G (the fastest mobile bandwidth), has 24.5 million customers, and holds 33.8% of the UK mobile market by revenue, according to Citigroup.
BT said owning EE would accelerate its plan of giving customers seamless access to the Internet whether via fibre broadband, wi-fi hotspots or 4G mobile services.
If acquisition goes ahead, BT will be able to provide innovative packages of TV and telecoms that could reshape how people buy their communications services in the UK. For example, BT Sport could be offered with no data charges, or even exclusive access, on an iPad or smartphone.
The decision to buy a mobile business will also reduce BT’s reliance on earnings from Openreach, the infrastructure arm of the company. Analysts said the deal will turn the unregulated consumer access and content business into more than half the enterprise value of the group.
The deal also provides BT with a new story to tell investors and an opportunity to reset market expectations over future earnings. There were signs that growth in its core superfast broadband business was slowing in the last quarter, while its TV business — for all the noise and fanfare — has not seen spectacular growth.
However, there are also some problems ahead, not least the need for network investment as EE has aimed to provide 4G services to 98 per cent of the country within the next few years.