Heralding its return to the UK wireless sector after a fourteen year absence, British Telecom (BT) agreed last Thursday to acquire Everything Everywhere (EE), the nation’s top provider of mobile network services, in a transaction valued at £12.5 billion (U.S. $19.1 billion).
EE, a joint venture owned equally by Deutsche Telekom (DT) and French carrier Orange, boasts the largest subscriber count of any British wireless carrier at 24 million customers, as well as the most advanced fourth-generation (4G) mobile broadband network in the UK. BT, which hasn’t offered mobile service since it spun off its BT Cellnet mobile division in 2001, commenced exclusive negotiations in December toward a potential acquisition of EE. When combined with 4G license rights acquired by BT in a 2013 spectrum auction, the EE deal will enable BT to offer a bundled package of fixed and mobile voice, broadband and video services to British customers in competition with converged service offerings launched previously by rivals Virgin Media and TalkTalk.
The terms of the agreement provide DT with a 12% stake in BT that will make the German carrier BT’s largest shareholder. Orange will acquire a 4% stake in BT, and DT CEO Timotheus Hottges will hold a seat on the BT board. Sources indicate that BT intends to raise £1 billion toward the purchase price through the sale of stock and by issuing debt. Advising reporters that “the UK’s leading 4G network will now dovetail with the UK’s biggest fiber network, helping to create the leading converged communications provider in the UK,” BT CEO Gavin Patterson termed the agreement as “a major milestone.”