StreetWise Journal

British Telecom confirms purchase of 4G mobile operator EE

British Telecom (BT) confirmed today that it will acquire mobile network EE for $19 billion. The company announced that it was in talks to buy the operator last December.

BT will make the acquisition through a cash and new BT ordinary shares. EE has around 31 million subscribers in the UK, and the largest 4G customer base of any operator in Europe.

EE and BT tie up

BT and EE will be the single biggest and most important telecoms provider in the country. Ofcom, the UK telecoms regulator, says BT is the largest home broadband provider in the UK with 31% market share, beating Virgin and Sky (20% each) and Talk Talk (20)%. EE currently has around 3% of the broadband market.

EE is by far the largest 4G provider in terms of revenue with over a third of the market – it has 3.6 million 4G subscribers, much more than Vodafone, O2 and Three. Besides the number of 4G customers, EE has a better 4G network with over 74% population coverage, more than O2 (at 41%) and Vodafone (36%). It has also come out top in 4G speed surveys, such as those reported by Open Signal.

BT left Britain’s mobile sector when it sold its Cellnet business to Telefónica in 2005 for £18 billion, a move that has been regarded as one of the worst moves in corporate history. Since then, BT has been under pressure especially in its fixed line and broadband businesses, but the telecoms landscape in the UK is a very different one to 2005. Increased competition and commoditisation of mobile networks as well as the emergence of triple-play and quad-play services, has made it hard to grow revenues.

But the ability to offer quad-play services is considered a cornerstone of BT’s strategy going forward:

“We firmly believe that convergence is the future of telecommunications in Europe. Customers want fixed-mobile converged services from a single provider” – Thomas Dannenfeldt, Chairman of EE’s Board of Directors.