Deutsche Telekom is set to be in driver’s seat in the UK telecom market after selling EE, its 50:50 joint venture with Orange, to BT because the German telecom giant will have 12 percent stake in BT Group.

As per the present negotiations, Orange will be collecting a higher proportion of cash and will hold 4 percent stake in BT Group.

“We firmly believe that convergence is the future of telecommunications in Europe. Customers want fixed-mobile converged services from a single provider. The transaction with BT offers the chance to further develop our superbly positioned mobile business engagement in the UK and to take part in the outstanding opportunities of an integrated business model,” said Thomas Dannenfeldt, chairman of EE’s Board of Directors and CFO of Deutsche Telekom.

Deutsche Telekom has over 142 million mobile customers, 31 million fixed-network lines and more than 17 million broadband lines as of December 31, 2013. Deutsche Telekom generated revenues of EUR 60.1 billion in the 2013 financial year – more than half of it outside Germany. Its U.S. telecom business T-Mobile US is one of the company’s main assets.

According to earlier media reports, Deutsche Telekom is keen to exit from the U.S. telecom market by selling its stake in T-Mobile US. Its earlier plans to sell the U.S. telecom company to SoftBank did not take off due to tough regulatory conditions.

According to separate statements, Orange and Deutsche Telekom entered into exclusive negotiation with BT Group regarding a potential divestment of 100 percent of their shares in EE.

The purchase price of £12.5 billion or $19.6 billion on a debt/cash free basis would be split equally between Orange and Deutsche Telekom.

The sellers beat Telefonica of Spain, which was negotiating to sell its U.K. division O2 to BT Group, reports from UK media.

A takeover of EE would give BT Group access to the U.K.’s biggest mobile-phone operator and create the country’s largest provider of bundles of mobile, home-phone, TV and Internet service. Europe’s wireless and fixed-line providers are combining to boost customer loyalty and monthly bills as consumers increasingly buy different services from one provider.

For the two sellers, a deal would mean the end of a four-year-old venture that was the first to offer service on high-speed, fourth-generation service. EE’s revenue has been falling, dropping 2.5 percent last quarter as prepaid customers defected.

EE has 580 retail stores and serves more than 30 million customers across its mobile, fixed and wholesale businesses. EE’s 4G coverage reaches 75 percent of the UK population. EE’s fiber broadband service covers 54 percent of the UK population, and ADSL broadband service covers 98.7 percent of the population.

Baburajan K
[email protected]