The combination of EE and BT will provide customers with innovative, seamless services that combine the power of fibre broadband with wi-fi and advanced mobile capabilities. Integrating the two companies will accelerate BT’s mobility strategy and increase BT’s capacity for future investment and product innovation as it continues to build world-class digital infrastructure in the UK. Both BT and EE have a proven track record in delivering transformation with strong financial results. EE has made substantial investments over the years, in acquiring mobile licences and in its network. To reduce the overall time needed for clearance, we then took the unusual step of applying for a so-called ‘fast track’ reference to phase 2, avoiding the need for a full phase 1 review as well. BT has agreed definitive terms to acquire EE for £12.5bn. We're EE, the UK's No. As at 31 December 2014, EE had 7.7m direct 4G mobile customers, the largest 4G customer base of any operator in Europe. (Replay available from 12:00 UK time), Dial in details: UK – 0844 800 3850; International – +44 844 800 3850; Discover the best mobile phone, sim and fibre home broadband deals. This includes BT selling its broadband, fixed telephony and pay-TV services to those EE customers who do not currently take a service from BT. We combine the knowledge, experience and energy of the whole firm to solve our clients’ most complex challenges, wherever and whenever they arise. The Transaction also provides a platform for BT and Deutsche Telekom to explore whether there are any opportunities to work together and share best practice in the future. EE limits the amount of revenue recognised upfront on sale of the handset to the amount of the arrangement that is not contingent upon the provision of service, i.e. And culturally, we’ll build a … Shareholders, Digital impact & BT intends to finance the cash consideration to be paid to Deutsche Telekom and Orange of approximately £3.4bn through a combination of the net proceeds of the Equity Placing and new debt financing. This dividend policy will not be affected by the Transaction. EE was ranked first for network performance by Rootmetrics in its August 2014 report. You can now continue to a version of our site in your chosen language. The European Commission was, at the same time, assessing the proposed merger between O2 and Three, two other UK MNOs. But our 20-strong team had detailed teach-ins and discussions with the CMA even prior to commencement of the phase I review: we explained the technology, the changing market place and the pro-competitive rationale for the transaction. He said: “BT Consumer had a stand-out quarter, increasing its overall line base for the first time in well over a decade and capturing 71% of new broadband customers. As a result of EE’s high depreciation charge, reflecting historical network investment, the Transaction is expected to be accretive to Adjusted EPS one year later3. This Announcement contains (or may contain) statements that are, or may be deemed to be, “forward-looking statements”, including within the meaning of Section 27A of the Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Up until today, it wasn’t certain that BT would be allowed to go ahead with … Its 3G coverage reaches 98% of the population. BT expects the Circular to be published within three months of this Announcement. The Sale and Purchase Agreement contains customary warranties, covenants, undertakings and conditions for a transaction of this nature. Of these, 24.5m are direct mobile customers, 834,000 are fixed broadband customers, 3.7m are MVNO customers and 1.9m are machine-to-machine connections. Digital Impact & Sustainability Report, Presentations for shareholders The line between mobile and fixed communications is becoming increasingly blurred. The Transaction is expected to generate significant operating cost savings and additional capex savings. The Prospectus will be published by BT close to Completion. If successful, this deal would have reduced the number of MNOs from four to three, making the approval of further consolidation less likely. Business, BT EE is part of BT Group – one of the UK’s biggest communications and IT companies. Combining the UK's most advanced 4G network with the most extensive superfast broadband network will help BT to deliver innovative, seamless services that combine the power of fibre broadband with wi-fi and advanced mobile capabilities. Orange will also be subject to a lock-up in respect of all of the BT shares it receives as consideration for a period of 12 months following Completion, subject to certain exceptions. BT’s integration approach will balance the opportunity to realise substantial synergies with the need to sustain trading momentum in markets which are, and will continue to be, highly competitive. Sims highlighted the continued importance of the division’s direct desk- and field-sales channel, but also the growing importance … At a BT group general meeting 99.7% of votes were in favour of the proposed acquisition of mobile operator EE, with a 62.8% turnout. Today’s announcement will ensure the UK remains at the forefront of the mobile revolution, bringing even more innovation and investment in world leading connectivity for our customers.”. This is another example of the consistent and successful execution of our portfolio optimisation strategy.”. This will only be confirmed once BT’s review of EE’s accounting policies and practices is completed. Where EE sells a bundled offer (e.g. In addition, the accounting standard IFRS 15 ‘Revenue from Contracts with Customers’, which will apply for BT for the year ending 31 March 2018, will affect the future recognition of revenue and costs. Sustainability, Digital impact & The combination also provides BT with greater scope for future investment and product innovation, as well as increased investment capacity to develop and deploy new networks and services. For a period of three years following Completion, Deutsche Telekom will (subject to certain customary exceptions) be restricted from purchasing BT shares, unless it acquires these directly from Orange, in which case its holding can increase to 15%. BT's full announcement on the situation is … BT expects to generate revenue synergies with a total net present value of approximately £1.6bn, The Transaction values EE at a multiple of 6.0x 2014 EBITDA and 9.6x 2014 OpFCF, adjusted for the net present value of the operating cost and capex synergies2, The Transaction is expected to be accretive to FCF per share in the first full year post Completion3. The Equity Placing will be launched in due course, Following the Transaction and Equity Placing, Deutsche Telekom will hold a 12% stake in BT and will be entitled to appoint one non-executive member of the BT Board of Directors. In addition, even if BT’s actual performance, results of operations, financial condition, distributions to shareholders and results of the Acquisition are consistent with the forward-looking statements contained in this Announcement, those results or developments may not be indicative of results or developments in subsequent periods. They are not guarantees of future performance and are based on one or more assumptions. The CMA normally assesses the implications of a deal during an initial 40-working-day ‘phase 1’ investigation, then in more detail during a six-month ‘phase 2’ of merger control proceedings. Sustainability, Better Digital Integration costs to achieve these are expected to be around £600m. Operationally, we’ll build a simpler, more dynamic BT. BT is confident it can use the combined experience to unlock significant synergies across the Enlarged Group. The combination of EE and BT will provide customers with innovative, seamless services that combine the power of fibre broadband with wi-fi and advanced mobile capabilities. English Perella Weinberg is also acting as a financial adviser to BT in connection with the Transaction. Under the terms of the Sale and Purchase Agreement between BT, Deutsche Telekom and Orange, BT will purchase the entire issued share capital of EE for a purchase price equivalent to £12.5bn on a debt and cash free basis. Goldman Sachs International is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. People are becoming more reliant on access to data whether in their home or business location, or on the move. 28 October 2015: The CMA has provisionally cleared BT’s anticipated acquisition of EE. Change, Innovating with £5.1bn to Orange comprising around 0.4bn new BT shares valued at around £1.7bn4 and cash of around £3.4bn. BT is buying EE from Deutsche Telekom and Orange, which will each become substantial shareholders in the UK company from the deal. Here you’ll find our lawyers’ latest perspectives on the business, legal and wider issues that matter. That’s why we’ll continue to strengthen them. £5.1bn to Deutsche Telekom comprising around 1.2bn new BT shares valued at around £5.1bn4 and a small cash payment; and. Goldman Sachs is acting as lead financial adviser to BT in connection with the Transaction. BT discussed the potential acquisition of EE with the Trustee of the BT Pension Scheme. This review will also include the finalisation and approval by BT of new accounting policies in areas not previously significant to BT. EE charges mobility-related subscriber acquisition costs to the income statement on connection of the customer to the network. To ensure we presented the strongest possible case to the CMA, we created a single project team made up of lawyers from Freshfields and BT, and economists from Compass Lexecon, working in a truly integrated manner. “This is a major milestone for BT as it will allow us to accelerate our mobility plans and increase our investment in them. Such financial information on EE contained in the Circular may therefore differ from the financial information set out above. Mobile devices are increasingly being used for data services, rather than just voice and text. When Freshfields client BT announced plans to acquire mobile operator EE, it prompted one of the most extensive and controversial UK merger control reviews of recent years. UK telco EE has formally submitted the case in favour of its acquisition of mobile operator EE to the UK Competition and Markets Authority (CMA), inevitably arguing the move will not reduce competition. The total fixed or determinable amount of the arrangement is allocated to the separate units of accounting based on their relative fair value. Its principal activities include the provision of networked IT services globally; local, national and international telecommunications services to its customers for use at home, at work and on the move; broadband, TV and internet products and services; and converged fixed/mobile products and services. Lives, Championing Human (a) Extracted without adjustment from the audited consolidated financial statements of EE Limited for the year ended 31 December 2013 EE capitalises customer premises equipment (such as broadband routers) and depreciates them whereas BT expenses similar equipment to the income statement on connection of the customer to the network. Each of Goldman Sachs International, J.P. Morgan Cazenove and Perella Weinberg and/or their affiliates provides various investment banking, commercial banking and financial advisory services from time to time to the Company. (d) One-off, non-cash accelerated recognition of Phones 4U prepayments +Comment BT is in talks to acquire EE for £12.5bn. BT has a right of first offer in respect of any off-market sales to financial investors by either Deutsche Telekom or Orange during their lock-up periods. BT Group plc Press office: BT consists principally of five lines of business: BT Global Services, BT Business, BT Consumer, BT Wholesale and Openreach. For BT and EE, the moment has finally arrived. It is the leading mobile network operator in the UK with 31m customers (as at 31 December 2014) across its mobile, fixed and wholesale businesses. This preceding summary should be read in conjunction with the full text of the following announcement and its appendices, together with the Circular which will be published in due course. Based on £2.3bn of adjusted net debt, being EE’s net debt as at 31 December 2014, adjusted for other debt-like items, the remaining consideration of £10.2bn would be payable by BT as follows: The Sale and Purchase Agreement contains a cap and collar protection mechanism which provides for an adjustment to the cash element of the consideration where there is a movement in the BT share price (in a defined period of time prior to Completion), subject to: a) a minimum BT share price of approximately 395.0 pence (being 4% below the closing price of 411.5 pence per BT share on 4 December 2014). The operating cost and capex savings are expected to be achieved as follows: BT expects to generate revenue synergies by providing a full-range of communications services to the combined customer base. Password: ‘February’, Replay: UK Freefone – 0800 032 9687; UK/International – +44 (0)207 136 9233 BT will in due course send a circular to shareholders (the “Circular”) convening a meeting to approve the Transaction and certain related matters (the “Extraordinary General Meeting”). Completion of the Transaction is subject to clearance under the UK Enterprise Act 2002 from the CMA. BT also expects to accelerate the sale of converged fixed-mobile services to its existing consumer and business customers and offer new services, using both companies’ product portfolios, skills and networks. Immediately following Completion, Orange will enter into a standstill and lock-up agreement providing that, for a period of three years following Completion, Orange will (subject to certain customary exceptions) be restricted from purchasing BT shares that would increase its total holding above 4%. BT Group plc (“BT”) announces today that it has agreed definitive terms with Deutsche Telekom A.G. (“Deutsche Telekom”) and Orange S.A. (“Orange”) to acquire EE Limited (“EE”) for a total purchase price equivalent to £12.5bn on a debt and cash free basis (the “Transaction”). Damien Maltarp Tel: 020 7356 4909, Enquiries about this news release should be made to the BT Group Newsroom on its 24-hour number: 020 7356 5369. (e) Extracted without adjustment from results announcements made by EE Limited for the year ended 31 December 2014 and the year ended 2013 The information contained in this announcement is not for release, publication or distribution to persons in the United States or any other jurisdiction, where to do so might constitute a violation of local securities laws or regulations. 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. The distribution of this Announcement into jurisdictions other than the United Kingdom may be restricted by law, and, therefore, persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Here, Enterprise will aim to use BT’s three main retail brands, BT, EE and Plusnet to target Enterprise customers ranging from SMEs to major corporates, with Plusnet playing at the price-focused end of the market, and EE where a mobile-centric approach is needed. Substantial operating cost and capex savings Fixed-mobile converged products have seen strong take-up in a number of Continental European markets, to the benefit of consumers. BT will also be required to publish a prospectus in connection with the Transaction (the “Prospectus”) in order to admit the Consideration Shares to be issued to Deutsche Telekom and Orange to the premium listing segment of the Official List. EE has overtaken the BT Consumer unit in revenues and was positioned as the broader company’s growth engine at the presentation of group financial results earlier this month. Its 4G coverage today reaches more than 80% of the UK population, covering 510 towns and cities and almost 4,000 villages. Shareholder authority to approve any such buyback will be sought at the same time as the Class 1 resolution to approve the Transaction. These forward-looking statements include matters that are not historical facts and include statements that reflect the directors’ intentions, beliefs and current expectations. During the period between signing and Completion, integration planning will be completed in partnership with EE, in conformity with relevant competition laws. BT has agreed definitive terms to acquire EE for £12.5bn. Our ambition is only as strong as the foundations we’re built on. EE delivers mobile and fixed communications services to consumers, businesses, government and the wholesale market in the UK. No offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, Shares will be made in any jurisdiction in which such an offer or solicitation is unlawful. Following the announcement, the UK’s Competition and Markets Authority (CMA) received objections from a host of players in the telecoms sector, resulting in the CMA investigating 10 different lines of inquiry. News, Individual The Equity Placing is expected to raise approximately £1bn and will be launched in due course. Counterpane Internet Security acquired by BT. Each Shareholder or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice. Ross Cook Tel: 020 7356 5369, Investor relations: At its Q3 2014/15 results on 30 January 2015, BT reconfirmed its dividend policy to grow its dividend per share by 10% - 15% in both 2014/15 and 2015/16. Our global teams span specialisms, regions and industries to deliver against three fundamental client needs: transactional, regulatory, risk. BT’s integration of EE is “going well”, claimed CEO Gavin Patterson, as the company reported a healthy rise in earnings boosted by the £12.5 billion acquisition of the mobile operator. a handset and a service contract), an assessment is made as to whether the elements represent separate units of accounting. The UK’s leading 4G network will now dovetail with the UK’s biggest fibre network, helping to create the leading converged communications provider in the UK. The Consideration Shares and any other securities referred to herein have not been and will not be registered under the Securities Act or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from or in a transaction not subject to the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The information contained in this Announcement is subject to change without notice and the Company does not undertake any responsibility or obligation nor does it intend to revise or update publicly or review any of the forward-looking statements in this Announcement to reflect events or circumstances after the date of this Announcement (except to the extent required by the Financial Conduct Authority, the London Stock Exchange or by applicable law, the Listing Rules or the Disclosure Rules and Transparency Rules). 100GB of data for the price of … BT had been eying up taking O2 from Telefonica. The financial information above has been extracted from information previously published by EE either in audited annual financial statements or results announcements. The revenue synergies are expected on a recurring basis, reaching a run-rate level in the fourth year post Completion. Integrating the two companies will accelerate BT’s mobility strategy and increase BT’s capacity for future investment and product innovation as it continues to build world-class digital infrastructure in the UK. Overview, Financial Reporting & A fast-track merger clearance. BT has been given clearance to complete its planned £12.5 billion takeover of EE by the UK's Competition and Markets Authority (CMA). Passcode: 1334 0331 BT Group board on alert for £15bn takeover approach. Terms of the Transaction The principal benefits of the Transaction are around the creation of the UK’s leading fixed-mobile converged communications provider in the UK. BT’s actual performance, results of operations, internal rate of return, financial condition, distributions to shareholders, the development of its financing strategies and the results or eventual success of the Acquisition may differ materially from the impression created by the forward-looking statements contained in this Announcement. No person has been authorised to give any information or to make any representations other than those contained in this Announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company, Goldman Sachs International, J.P. Morgan Cazenove or Perella Weinberg. BT today announced a new organisational structure that will take effect from April. Neither the content of the Company’s website nor any website accessible by hyperlinks on the Company’s website is incorporated in, or forms part of, this announcement. The following matters are noted in relation to these areas: Although based on this desktop review BT does not expect the differences in accounting policies to have a material impact on EE’s EBITDA, it may affect the timing of recognition. As talks over a £12.5bn deal continue, the scene is set for the start of a UK telecoms shake-up The BT tower in London. home, For BT included windfalls from the EE deal for the first time, as it accounted the mobile operator in its Q4 and end year financials from 29 January, shortly after completing the blockbuster deal. Significantly value-accretive transaction. BT's acquisition of EE is complete. Goldman Sachs International, J.P. Morgan Cazenove and Perella Weinberg are acting exclusively for the Company and are acting for no one else in connection with the Transaction and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Transaction and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in connection with the Transaction or any other matter, transaction or arrangement referred to herein. Provisional findings report (PDF, 3.68 Mb) (30.10.15) Appendices and Glossary (PDF, 5.59 Mb) (30.10.15) operational savings with an annual run-rate of approximately £120m from consolidating head office functions, rationalising property and realising scale economies in customer service operations. EE has invested in additional capacity to accommodate the rapid increase in data demand driven by 4G. Technologically, we’ll build the best converged networks. In accordance with the Listing Rules, the Circular will contain historical financial information on EE covering the three years ended 31 December 2014, 2013 and 2012 prepared in accordance with IFRS and consistent with BT’s accounting policies, whether set out in BT’s 2013/14 Annual Report and Form 20-F or, where it does not currently have a relevant accounting policy, those BT proposes to adopt in the future. Orange could also make off-market sales to financial investors (who will then be subject to the same lock-up restrictions for the remainder of the 12 month period). It will not be conditional upon the Transaction. EE (formerly Everything Everywhere) is a British mobile network operator and internet service provider, which is a brand within the BT Group.EE is the largest mobile network operator in the United Kingdom, with 27.5 million subscribers as of October 2020. Get this deal Log in to upgrade i PHONE 12 WITH 5G NOW IN PURPLE. Given these trends, BT will continue with its plans to start offering consumer mobile services before the end of March through its existing MVNO agreement with EE. In the last few years alone, we have built the UK’s biggest, fastest and best 4G network, significantly advancing the digital communications infrastructure for people and businesses across Britain. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this Announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this Announcement or that the information in it is correct as at any subsequent date. BT expects that its existing credit rating will be at least maintained following Completion. As at 31 December 2014, EE had approximately 13,000 employees. No assurances can be given that the forward-looking statements in this Announcement will be realised. J.P. Morgan Limited (which conducts its UK investment banking activities as J.P. Morgan Cazenove) is authorised and regulated in the United Kingdom by the Financial Conduct Authority. This evidently proved to be of strategic benefit for our client BT, as the CMA cleared the merger unconditionally, without the need for remedies. It has the largest 4G customer base of any operator in Europe. BT. Accept cookies to experience the full functionality of this page. An integration project management office will manage the overall integration process that will take place following Completion. If the Board changes its recommendation that Shareholders vote in favour of the Transaction or if BT recommends an alternative transaction prior to Completion, then Orange and Deutsche Telekom can terminate the Sale and Purchase Agreement and BT shall pay a break fee of £250m (in aggregate) to Deutsche Telekom and Orange. BT is one of the world’s leading providers of communications services and solutions, serving customers in more than 170 countries. The news for EE customers at this time is that EE will continue as its own business, we presume not unlike how Plusnet operates. the amount paid by the customer for the handset. commercial savings with an annual run-rate of approximately £70m from consolidating sales and marketing operations, procurement efficiencies and simplifying digital platforms and the brand portfolio; IT savings with an annual run-rate of approximately £90m through consolidating IT systems and insourcing activities; network savings with an annual run-rate of approximately £80m through integrating some network elements and insourcing certain activities; and. in the fourth full year post Completion. The cash return on investment is expected to comfortably exceed BT’s cost of capital in the third year post Completion on the basis of actual synergies and integration costs. 1 network with superfast 5G and 4G. BT aims to achieve this through investing in five strategic growth areas: fibre; TV and content; mobility and future voice services; UK business markets; and supporting leading global companies. BT Group plc (“BT”) announces today that it has agreed definitive terms with Deutsche Telekom A.G. (“Deutsche Telekom”) and Orange S.A. (“Orange”) to acquire EE Limited (“EE”) for a total purchase price equivalent to £12.5bn on a debt and cash free basis (the “Transaction”).
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