BT opts for EE over O2 as it enters exclusive talks over takeover worth £12.5bn

Jessica Morris
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BT could be about to choose EE over its rival O2 (Source: Getty)

BT has confirmed that it has entered into exclusive talks with mobile operator EE, which has seemingly beaten its rival O2 to the £12.5bn takeover deal.

The telecoms giant said that the period of exclusivity "will last several weeks" to allow the necessary negotiations to be completed.

The deal would be paid through a combination of cash and new BT shares issued to EE's owners Deutsche Telekom and Orange. Deutsche Telekom would receive a 12 per cent stake in BT and the right to appoint one member of its board of directors. Orange would get a four per cent stake.

BT said in a statement:

The proposed acquisition would enable BT 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.

BT would own the UK's most advanced 4G network, giving it greater control in terms of future investment and product innovation.

The battle between EE and O2 for the valuable BT acquisition intensified in recent weeks. There were reports that both companies would be willing to accept a reduced offer including shares in BT as part of the takeover.

Today's decision reportedly follows days of negotiations between BT, EE and O2.

The deal marks BT's return to the consumer mobile market after selling its operation arm, which was what is now O2, back in 2001.

Analysts have said today's move, which could add mobile to BT's services, is crucial if it wants to compete with rivals who are able to offer customers complete packages of landline, mobile, broadband and TV.

Imran Choudhary, senior analyst at Kantar Worldpanel says:

Moving into the mobile market is a must for BT to defend its premium services which are increasingly threatened as other players enhance their triple and quad play offerings.

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