BT Group Plc on 5 February 2015 acquired UK wireless carrier EE Limited for 19 billion US dollar. Orange SA and Deutsche Telekom AG, will receive as much as 6.2 billion US dollar in cash and the remainder in new BT shares.
The combination will generate cost savings valued at about 3 billion US dollar. The deal is projected to be completed by March 2016.
After the deal, London-based BT will control the biggest high-speed broadband network as well as the largest wireless operator in the U.K., letting it sell packages of mobile, TV, home phone and Internet services.
BT, Britain's biggest fixed-line telecoms provider, has been in exclusive talks since December 2014 to buy the country's biggest mobile network operator.
Under the terms of the deal, BT will pay EE owners Deutsche Telekom and Orange a combination of cash and shares. It will leave Deutsche Telekom – Germany’s partly state-owned telecoms company with a 12% stake in BT, while France’s Orange will be paid about 3.4 billion pounds in cash and hold a 4% stake.
Carriers worldwide are pursuing a strategy that lets them sell a broader array of services to increase revenue and customer loyalty. Europe’s mobile companies are still coping with declining sales after years of intense competition to win subscribers in saturated markets.
For BT, the move into wireless is part of the former phone monopoly’s transformation that’s included rolling out a high-speed fiber-optic broadband network and bidding for exclusive access to popular sports broadcast rights.
Still, a multi-billion dollar acquisition leaves BT with diminished coffers to bid for TV rights such as those for the U.K.’s Premier League soccer games. In 2012, as BT prepared to unveil its sports channels, the company agreed to pay 246 million pounds a season for the franchise.
BT reported net debt of 6.2 billion pounds at the end of 2014. Its debt is rated BBB, the second-lowest investment grade, by Standard & Poor’s. The carrier plans to finance the purchase with borrowings and about 1 billion pounds in a stock placement.