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BT reveals EE/O2 decision

After much speculation, it looks like we finally have a decision on the EE/O2 saga.

BT has announced that it has entered into an exclusivity agreement with Deutsche Telekom and Orange regarding the possible acquisition of EE, their UK mobile business.

This exclusivity period will last several weeks in order for BT to complete the relevant due diligence and for negotiations to be concluded.

The proposed acquisition would enable BT to accelerate its existing mobility strategy whereby customers will benefit from 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.

The key, non-binding headline terms include a purchase price of £12.5bn for EE on a debt/cash free basis as a combination of cash and BT shares issued to both Deutsche Telekom and Orange.

Following the transaction, Deutsche Telekom would hold 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 4 per cent stake.

One example BT expects to generate revenue is through selling fixed-line services to those EE customers who do not currently take a service from BT, and by accelerating the sale of converged fixed-mobile services to BT’s existing consumer and business customers.

The exclusivity agreement does not require a transaction to take place and, if one is agreed, approval by BT’s shareholders will be required as a condition of the purchase.

Stay tuned for further announcements.

Update: We have received a comment from Imran Choudhary, senior analyst at Kantar Worldpanel, saying: “Acquiring EE would give BT instant access to roughly one in three mobile customers in the UK who already use the EE network. BT already has an agreement with EE to use part of its network, so buying the whole network would provide a strong platform for BT to lead the telecommunications sector in the UK.

"Consumers should see some real benefits as others follow its lead with quadplay offers. Moving into the mobile market is a must for BT to defend its premium services which are increasingly threatened as other players enhance their triple and quad play offerings.”

Sam is Head of Content at Red Lorry Yellow Lorry, and has more than six years' experience as a reporter and content writer, having held the positions of Production Editor, Staff Writer, and Senior Business Writer at ITProPortal.