BT seals EE deal to dominate British telecoms market

Thu Feb 5, 2015 10:54am EST
 
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By Paul Sandle and Kate Holton

LONDON (Reuters) - BT (BT.L: Quote) has finalised a deal to buy mobile operator EE for 12.5 billion pounds ($19 billion) and now faces a contested approval process to seal its status as Britain's dominant communications company.

The deal, bringing together BT's more than 10 million retail customers and EE's 24.5 million direct mobile subscribers, will be funded by a 1 billion pound share issue and 2.4 billion pounds of new debt, and was warmly received by investors who sent its shares to a 14-year high.

But its rivals have already called on regulators to intervene, wary that the fixed-line market leader and main infrastructure provider could abuse its position and reduce competition.

BT had spent the last few weeks in exclusive talks with the owners of EE, Orange (ORAN.PA: Quote) and Deutsche Telekom (DTEGn.DE: Quote), about a deal. The German and French companies will hold 12 percent and 4 percent stakes in BT, respectively.

"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 on Thursday.

BT had 38 percent of the fixed-line market at the end of 2013, while EE had a third of the mobile market, according to Ofcom and EE.

Patterson said he expected the deal to be scrutinized in Britain, rather than Brussels, and did not expect competition authorities to impose stringent remedies.

Britain would still have four mobile networks, he said, and BT would be no different than European peers like Orange, Deutsche Telekom and Telefonica (TEF.MC: Quote), with both fixed and mobile networks. "Fundamentally we believe this will pass merger control, and we will be pushing for that very quickly."   Continued...

 
A closed EE shop is seen in London, February 5, 2015. REUTERS/Suzanne Plunkett