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BT Group In Exploratory Discussions With EE Limited

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The two owners of EE Limited confirmed on Wednesday, November 26th that they were in talks to sell the UK’s largest mobile network operator to BT Group plc (ADR) (NYSE:BT) as part of an internal restructuring effort.

BT Group logo

Traditional telecom operator BT announced on Monday that it was talking with both Telefonica S.A. (ADR) (NYSE:TEF)’s O2 and another telecom operator about acquiring a mobile business. A knowledgeable Reuters source said EE, owned by Deutsche Telekom AG (ADR) (OTCMKTS:DTEGY) (ETR:DTE) and Orange SA (ADR) (NYSE:ORAN) (EPS:ORA), was the other party.

Telecom sector analysts suggest that EE, which represents 33.8& of the British mobile market in terms of service revenue and is the leader in 4G mobile broadband, is likely to be valued somewhere in the neighborhood of 10 billion pounds ($16 billion).

Of note, Orange and Deutsche Telekom have previously evaluated the possibility of taking the firm public, ie, listing EE as a separate entity on a stock exchange.

Statement from Deutsche Telekom and Orange

The owners of EE Limited, Deutsche Telekom AG (ADR) (OTCMKTS:DTEGY) (ETR:DTE) and Orange SA (ADR) (NYSE:ORAN) (EPS:ORA), released a statement Wednesday confirming ongoing discussions. “Deutsche Telekom and Orange, the joint shareholders of EE, regularly analyse the development of the market in which EE operates, evaluating various strategic options which have the potential to create value for EE’s shareholders and strengthen the market position of EE. As one of these options, Deutsche Telekom and Orange are in exploratory discussions with BT, although it is too early to state whether any transaction may occur.”

Deal would leapfrog BT Group back into mobile market

Sector analysts also note that a deal for EE would instantly turn BT Group plc (ADR) (NYSE:BT) into a major player in the mobile sector. Getting back into mobile market would keep BT in a strong position as the UK consumer telecom market metamorphoses into single operators offering packages of fixed line and mobile broadband and pay-TV services.

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