EE plans to rid themselves of Orange and T-Mobile in anticipation of BT’s £12.5 billion takeover deal of the nearly five year old company. The deal would enable the creation of a telecoms behemoth providing services that would include mobile and home phones as well as TV and broadband.
According to Orange, an “exclusive negotiation” was reached last December with “BT Group plc (BT) regarding a potential divestment of 100% of their shares in EE.” The deal will be done on a “debt/cash free basis” and divided between Orange and Deutsche Telekom equally. It would also include a combination “cash and new BT shares” with Orange having a 4% stake in BT, while Deutsche Telekom will maintain a 12%.
Deutsche Telekom’s CFO and Chairman of EE’s Board of Directors, Thomas Dannenfeldt, revealed in a statement that the company believes “that convergence is the future of telecommunications in Europe. Customers want fixed-mobile converged services from a single provider.” He added that the possible “transaction with BT offers the chance to further develop our superbly positioned mobile business engagement in the UK and to take part in the outstanding opportunities of an integrated business model.”
EE CEO, Olaf Swantee, told The Telegraph that purchase of his company by BT was mainly due to the fact that they are the best network in the nation. He said, “Britain was behind the US and Korea and many other markets, now we are absolutely on top of the world in terms of network, and number one for the number of customers using 4G here in Europe.” EE has done well as a competitor to companies such as O2 and Vodafone while holding, based on Citigroup estimates, “33.8% of the UK mobile market by revenue.”
BT announced that the acquisition would allow their company “to accelerate its existing mobility strategy whereby customers will benefit from innovative, seamless services that combine the power of fibre broadband, wi-fi and 4G.” The company further revealed that they anticipate “significant synergies mainly through network and IT rationalisation, back-office consolidation and savings on procurement, marketing and sales costs.” BT also disclosed that they foresee generating “revenue synergies through selling fixed-line services to those EE customers who do not currently take a service from BT, and by accelerating the sale of converged fixed-mobile services to BT’s existing consumer and business customers.”
However, FT has reported that EE will “phase out” both Orange and T-Mobile brands. Furthermore, the company will cease the selling of 3G contracts, while transferring new customers to 4G plans. EE revealed to the FT that there is a “huge appetite for faster mobile internet.” The company added that it intends to “focus exclusively on offering new and upgrading customers our great value range of 4G plans” and that it “will continue to serve customers on Orange and T-Mobile plans.”
The completion of BT’s acquisition of EE is reportedly expected to take place in the summer or the early part of the fall. So far the company is still going through a due diligence process, looking into EE’s books before the deal is finalized.