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BT Chooses EE Over O2 in $19.6 Billion Mobile Deal

The deal would give the fixed-line firm a strong position to return to the consumer mobile market.

Reuters / Suzanne Plunkett

Britain’s BT has entered into exclusive talks with Orange and Deutsche Telekom to buy EE for 12.5 billion pounds ($19.6 billion), opting for the country’s biggest mobile operator over rival suitor, Telefonica’s O2.

BT had been in talks with Telefonica and EE’s owners since late November about a deal to buy one of the providers, giving the fixed-line firm an unusually strong position to return to the consumer mobile market.

BT said that if the deal completes Deutsche Telekom would hold a 12 percent stake in BT and would be entitled to appoint one board member, whereas Orange would hold a four percent stake.

The French and German companies each owned 50 percent of EE, after a merger of their Orange and T-Mobile units in 2010. The business, which had 24.5 million direct customers, generated adjusted core earnings of 1.6 billion pounds in the year to end of June.

BT said it offered shares as well as cash because it was mindful of its need to maintain a strong credit rating.

BT said buying the country’s biggest high-speed mobile network would accelerate its strategy of giving customers seamless access to the Internet whether via fiber broadband, Wi-Fi hotspots or 4G mobile services.

BT said combining EE’s mobile network with its own fixed lines would deliver cost savings through the rationalization of networks and operations. It will also seek to sell broadband to EE customers that it does not already serve.

“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,” it said.

(Reporting by Kate Holton; editing by Paul Sandle)

This article originally appeared on Recode.net.

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