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EE is to be bought for £12.5bn by BT

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BT is destined to become the largest operator in the UK

BT is destined to become the largest operator in the UK

After less than 60 days of negotiations BT informed that it will take over EE for 12.5 billion pounds.

In the middle of December, BT announced that it is in serious talks with EE over acquiring it. British telecommunications giant wanted to use EE’s customer base and network with the largest mobile coverage to enter the mobile phone market and as a result become a major player on the quad play market. Now, the operator assured that the negotiation period is over and the sale is going to be completed in March 2016.

The deal itself is a combination of shares and cash in the total value of £12.5bn. Deutsche Telekom and Orange, current owners of EE, will get 12% and 4% stake in BT respectively. Orange will additionally get £3.4bn in cash. The prices may seem to be overwhelming at first but if you consider what kind of potential is behind EE, you may see that BT got a fair deal.

The news means that BT will become the largest telecommunications company in the UK that will have both the largest broadband network and the best and the most advanced mobile coverage. Obviously, that was positively reflected on BT’s share price as it rose by 4.5%, proving that BT’s return to the mobile market. Gavin Patterson, the CEO of BT, called this deal a milestone that would help accelerate sales and create leading world-class digital infrastructure for Britain.

Some customers see this as a potentially dangerous situation as consolidation may hurt them because competition will lessen. Patterson reassured that if there are to be any changes for the customers they will be only positive. To his mind, consumers will be able to get a full package of telecommunications service at a better price, because quad play can offer price reduction as consumer buy services as a bundle.  Nevertheless, before the deal is finalized the operators need to get an approval from UK Competition and Markets Authority which looks over the market and keeps the market fairly competitive.

Olaf Swantee, CEO of EE, commented on the news saying that he is excited by this deal and sees it as an opportunity for the UK to be the leader in mobile technologies. This will have great consequences for the market and we hope to see technological development as a result of the consolidation of the market.

Written by adm

February 10th, 2015 at 3:31 pm

Posted in mobile coverage

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Both EE and O2 are up for sale!

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New Year may be bring a big change on the British telecoms market

New Year may be bring a big change on the British telecoms market

Owners of EE and O2 are considering their options as both BT and Three UK are interested in buying them out

Last week rumours about talks between operators were confirmed. Both O2 and EE were approached by BT representatives as it seems that the British telecommunications company wants to come back to the mobile market. Analysts estimate that EE is the largest network in the UK with one-third of the market in their hands, while O2 is just behind it with a quarter of the market.  The potential value of these main operators is £10bn and £9bn respectively. EE is owned by Deutsche Telekom and Orange and these two shareholders were looking into many options, however, this is the first time that a possible sale is seriously considered. The other operator, who is up for grabs, is O2. If BT bought it, then the history would make a circle as O2 was originally cut out of BT Group in 2001 which was then operating in the red.  A few years later it was bought by French Telefonica.  There has not been any official statement released by BT so what we know is that both main operators have talked with BT but they are probably secretly negotiating.

But the situation got a bit more complicated as Hutchison Whampoa, Three UK’s parent company, also got interested into expanding their market share by acquiring either O2 or EE. This Chinese multinational company has been recently spending a lot of money on buy-outs and merger. For example, this year it has bought O2 Ireland. With two potential buyers it seems that we might soon see a big change on the telecoms market

Obviously the talks are in preliminary stages and such a big acquisition had to be approved by Ofcom. The watchdog once stated that having four main operators creates a healthy market in the UK. This means that Hutchison Whampoa may have to worry about whether it would be allowed to conclude such a purchase. On the other hand, BT’s return to the market would definitely create a new powerful competition on the market but would not disturb the balance and we would still have four independent operators.

Written by adm

December 2nd, 2014 at 12:04 pm

Posted in networks

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