BT in exclusive talks with giant EE over £12.5bn takeover deal to take it back into the mobile market

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BT has confirmed it is now in exclusive talks over a £12.5 billion deal to buy Britain's biggest mobile phone operator EE.

The news comes after days of speculation over whether BT would opt to bid for O2 or rival EE, which is owned by Deutsche Telekom and Orange.

BT was forced to exit the mobile phone market more than a decade ago when it was desperate to escape a multi-billion pound debt pile. A move back into it is a major step towards the telecom giant's long-awaited return to the mobile market and ambition to be a market leader across telephone, broadband and TV.

EE: The mobile phone giant is in £12.5bn takeover talks with BT

If the deal is accepted, it will allow BT's existing customer access to EE's super-fast fibre broadband, wi-fi and 4G. 

BT will also benefit from EE's 24.5million mobile customers and can expect to generate extra revenue by selling fixed-line phone services to those EE customers who do not currently take a service from BT.

BT will begin several weeks of talks over the potential cash and shares deal worth £12.5 billion, a move which is set to result in Deutsche Telekom holding a 12 per cent stake in BT and Orange taking a 4 per cent stake. 

Deutsche Telekom would also be entitled to appoint one member of the BT Board of Directors.

The period of exclusivity will last several weeks allowing BT to complete its due diligence and for negotiations on a definitive agreement to be concluded. The exclusivity agreement does not require the parties to enter into a transaction. If a transaction is agreed, approval by BT's shareholders will be required as a condition of the purchase. 

The deal is seen as a game-changer for BT and its ambitions to offer services across mobile, home phone, internet and TV. 

BT shares climbed after it revealed at the end of November that it was in talks to buy EE, Britain’s biggest mobile phone company.

The former telecoms monopoly had said it was in talks with two mobile groups including former Cellnet group O2. 

But the identity of the second group was only revealed later after EE – the collaboration between Orange and T-Mobile – confirmed talks.

The pair had previously considered floating EE on the London Stock Exchange, but put the plans on ice more than a year ago.

It is already the largest mobile group in the UK with 27 million customers, while BT is the biggest provider of landlines and home internet.

Dominic Baliszewski, telecoms expert at broadbandchoices.co.uk said: 'BT has gone full circle with the acquisition of mobile network EE, having only left the mobile space 12 years ago when it sold BT Cellnet. 

'The trend for providers to offer the full suite of home comms services (broadband, TV, mobile, landline) is showing no sign of slowing, but UK customers have not yet embraced quad-play as enthusiastically as in other European countries, such as Spain, where quad-play is hugely successful. 

'UK customers largely view a mobile phone as a personal purchase rather than part of their household spend so a fundamental shift in perception is needed to make quad-play the norm. Should this deal go ahead, millions of people who are both EE mobile customers and BT broadband/TV customers already will effectively become triple or quad play BT customers without even blinking.'

BT shares closed up 0.2 per cent today at 398.2p, one of the few risers on a day in which the FTSE 100 index closed down 1.9 per cent.