Deutsche Telekom, Orange sell EE to BT for GBP 12.5 bn

Deutsche Telekom and the French telecommunications operator Orange have announced they are selling EE, their mobile joint venture in U.K, to British telecommunications operator BT Group for GBP 12.5 billion.

Upon closing the transaction Deutsche Telekom will become the largest shareholder in BT with a stake of c. 12 percent, the company said in a statement.

Commenting on the significance of this transaction, Tim Höttges, CEO of Deutsche Telekom, said, “The transaction is much more than just the creation of the leading integrated fixed and mobile network operator in Europe’s second largest economy.”


“We will be the largest individual shareholder in BT and are laying the foundations for our two companies to be able to work together in the future. This is another example of the consistent and successful execution of our portfolio optimization strategy,” Höttges added.

For BT, the acquisition is significant as it will help them accelerate mobility plans and increase their investment in the same, said Gavin Patterson, CEO of BT.

The combined capabilities of U.K’s leading 4G network with the U.K’s biggest fiber network will lead to the formation of a converged communications provider in the U.K.

“The deal provides an attractive opportunity for BT to generate considerable value for shareholders, with significant operating and capital investment efficiencies supported by our tried and tested cost transformation activities,” Patterson added. “The enlarged BT will offer significant opportunities for employees as we lead the creation of a world class digital infrastructure for Britain.”

The agreed purchase price of GBP 12.5 billion for EE is an attractive valuation at 7.9 times the operating EBITDA of 2014. Depending on BT’s share price and other factors at closing, Deutsche Telekom may receive a cash payment beside the 12 percent stake in BT.

Deutsche Telekom will retain exposure to the potential synergies.  A lock-up period of 18 months has been agreed for the BT shares of Deutsche Telekom.

Following this transaction, Deutsche Telekom will be given a seat on BT’s Board of Directors. Based on its experience in other markets, Deutsche Telekom will look to contribute to the successful integration of EE into BT and the development of fixed-mobile convergent products.