BT favours EE over O2 for exclusive talks on a potential $19.6 billion acquisition deal. It's seen as the costlier and more ambitious option - but would give the UK firm the top position in mobile and fixed line broadband. Amy Pollock reports.
BT goes exclusive with EE as it prepares to return to the consumer mobile market. The British telecom giant says it's working with the owners of EE on a 12.5 billion pound acquisition deal in both cash and shares. Deutsche Telekom is set to get a 12 percent stake in BT and the right to appoint one board member. While France's Orange will get more cash and only a 4 percent stake. If the deal comes off, BT will lead the mobile and fixed-line broadband markets in the UK. The UK's former state telecoms company has finally settled on the network after competing talks with Telefonica's O2. EE had been valued closer to 11 billion pounds compared to O2's estimated 9 billion pounds. But IHS Technology's Daniel Gleeson says the innovative network is worth the extra cost to BT. (SOUNDBITE) (English) SENIOR ANALYST AT IHS TECHNOLOGY, DANIEL GLEESON, SAYING; "EE is the market leader in the UK so it's obviously a better buy from that point of view. It's also the leader in 4G rollout in the UK, it has a much better built network in that regard. So those are very attractive options for BT. Also BT has a much more closely working relationship with EE, BT uses the EE network for it's own enterprise customers and for it's own mobile services." This is despite the regulatory scrutiny the takeover is likely to receive. And BT's other suitor Telefonica will now be forced to woo other buyers for its O2 network. (SOUNDBITE) (English) SENIOR ANALYST AT IHS TECHNOLOGY, DANIEL GLEESON, SAYING; "Telefonica quite clearly do want to sell their network and it's taken out the most likely bidder. The next most likely bidder would be 3, the fourth largest of the UK's networks. But that would lead to a lot more regulatory scrutiny of any deal, because it would be further consolidating a market that only a few years ago had five different mobile operators." EE will bring 24.5 million direct customers to BT. The telecoms firm says EE's 4G prowess will help speed up its plans to integrate internet services for its customers. The hotly anticipated deal lifted European shares in early trading after a week-long sell-off. And one of BT's biggest investors, Woodford Investment Management, has already given its backing to the deal.