BT Finalises £12.5bn EE Deal But Will Still Launch MVNO

BT has finalised a deal to acquire mobile operator EE for £12.5bn but still plans to launch its own Mobile Virtual Network Operator (MVNO) before the deal is completed.

The former state monopoly had been considering a bid for former subsidiary O2, but in Decembers entered into “exclusive negotiations” with EE’s parent companies Deutsche Telekom and Orange so it could complete due diligence.

That period has now been concluded and BT hopes to complete the acquisition of EE before the end of the 2015-16 financial year, subject to shareholder approval and regulatory clearance.

BT converged

BT says the combination of its superfast broadband network, which reaches 22 million premises, and EE’s LTE network, which covers 80 percent of the UK population, will result in the creation of the UK’s “leading communications provider” offering converged fixed, mobile and Wi-Fi services.

“This is a major milestone for BT as it will allow us to accelerate our mobility plans and increase our investment in them,” said BT CEO Gavin Patterson. “The UK’s leading 4G network will now dovetail with the UK’s biggest fibre network, helping to create the leading converged communications provider in the UK.

“Consumers and businesses will benefit from new products and services as well as from increased investment and innovation. The deal provides an attractive opportunity for BT to generate considerable value for shareholders, with significant operating and capital investment efficiencies supported by our tried and tested cost transformation activities.

“The enlarged BT will offer significant opportunities for employees as we lead the creation of a world-class digital infrastructure for Britain.”

EE mobile assets

EE is the UK’s largest mobile operator with 24.5 million customers, 7.7 million of which are on 4G. Its network also hosts an additional 3.7 million connections through EE’s Mobile Virtual Network Operator (MVNO) partners and 1.9 million M2M connections.

The company also has 834,000 broadband subscribers, but BT says the two firms’ assets are complementary, possibly in a bid to appease any regulatory concerns.

“Joining BT represents an exciting next stage for our company, customers, and people,” added EE CEO Olaf Swantee. “In the last few years alone, we have built the UK’s biggest, fastest and best 4G network, significantly advancing the digital communications infrastructure for people and businesses across Britain. Today’s announcement will ensure the UK remains at the forefront of the mobile revolution, bringing even more innovation and investment in world leading connectivity for our customers.”

BT own network

However, despite the acquisition of an expensive mobile network, BT still plans to press ahead with its own plans for a mobile network. It agreed a MVNO partnership with EE last year and already offers 4G to businesses, but hopes to offer mobile services to consumers using a combination of the MVNO and the BT Wi-Fi network.

This, BT says, will allow it to offer a seamless connection to customers no matter what device they are using by passing traffic between fixed, wireless and cellular infrastructure. It had previously been suggested the consumer service would launch in April, but there have been suggestions that BT has struggled with the technology that could facilitate this handover.

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