BT confirms talks to acquire EE for £12.5 billion

After weeks of speculation linking it with the acquisition of one of the UK's two biggest mobile carriers, BT has finally confirmed that EE will be the subject of its affection. The telecoms giant announced today that it has entered "exclusive negotiations" with a view to buying the Orange and Deutsche Telekom joint-venture for £12.5 billion. BT says the deal will allow it to "accelerate its existing mobility strategy" and re-enter the mobile market after it sold off O2 for £17.7 billion almost a decade ago.

As it stands, the deal is far from complete. Today's announcement highlights that BT will now "complete its due diligence" and confirm the specifics of the agreement. However, BT says that under its current terms, Deutsche Telekom would gain a 12 percent stake in the company, while Orange would own 4 percent.

BT says a potential tie-up with EE would allow customers to enjoy both company's collective fibre broadband, Wi-FI and 4G services. However, with likely dominance of both the fixed-line and mobile markets, competition watchdogs might have some reservations. UK communications regulator Ofcom would presumably need to assess the collective strengths and weaknesses of a BT/EE tie-up, as would officials at the European Commission.

When BT first validated reports that it was seeking to acquire an operator, it looked as if O2 would be its chosen target. With less 4G spectrum and a dedicated focus on mobile (not TV or broadband services), a potential merger with O2 might have faced less regulatory scrutiny. BT obviously believes EE is worth the additional risk, and it might not have to wait too long to see what officials have to say.