BT enters EE takeover talks

<p>BT could be set to purchase EE for £12.5 billion.</p>

BT Group has opened talks about a possible multi-billion pound takeover of the EE mobile network.

In November, the company had held preliminary discussions with Orange and Deutsche Telekom, owners of EE, about a potential deal that would see BT acquire EE. It had also been in "highly preliminary" talks with Spanish telecoms giant Telefonica about a similar move for the O2 mobile network but it now seems that it has turned its attentions to EE.

Should the deal gain approval, BT will pay £12.5 billion for the mobile network on a debt/cash free basis. Under the new agreement, Deutsche Telekom would retain a 12 per cent stake in BT and would be entitled to appoint one member of the BT board of directors. Orange would hold a four per cent stake in the operation.

In a statement, BT said: "The proposed acquisition would enable BT to accelerate its existing mobility strategy whereby customers will benefit from innovative, seamless services that combine the power of fibre broadband, Wi-Fi and 4G. BT would own the UK’s most-advanced 4G network, giving it greater control in terms of future investment and product innovation."

EE has become the largest mobile provider in the UK following a merger between Orange and T Mobile in 2010. It has been able to usher in new technology into the mobile sector such as 4G broadband making it easier for users to download movies onto their device as well as streaming music and TV programmes.

If BT is successful in its takeover of EE it help to reinforce its position as the dominant force within the UK telecoms sector. The company is also the only within the sector that owns mobile masts along with a significant broadband network. Analysts believe that £12.5 billion will be paid in half cash and the rest coming through a rights issue or share placement.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.