BT Group Plc, the British multinational telecommunications giant, is reportedly in talks of buying UK-based mobile network operator EE Limited for a deal worth $19.6 billion.
BT said that if an agreement is arrived upon, the firm will finance the deal through a combination of cash and stock. EE owners Deutsche Telekom AG and Orange SA would get 12 percent and 4 percent stake in BT's board, respectively, if a deal is struck, The Wall Street Journal reported.
If the acquisition is confirmed, BT will expand into the mobile sector and get access to EE's large consumer base.
"The proposed acquisition would enable BT to accelerate its existing mobility strategy," BT said in a statement.
EE is a market leader in the United Kingdom holding 33.8 percent market share in the region. It offers the fastest 4G network and has about 24.5 million customers. BT could use EE's strength to its advantage. The fixed-line giant also added that there would be "significant synergies" and savings on IT, marketing, sales and other back end expenses.
The Financial Times reports that the deal is almost sealed and a confirmed announcement could be expected on Tuesday.
EE confirmed in late November that its owners were exploring a sale. BT was looking to acquire a mobile network operator for quite some time. It set its sight on EE and O2 but finally decided on EE.
Experts deem the EE deal "complicated to execute" because the network has two stakeholders. On the other hand, O2 has a single owner and is relatively smaller, which would be easier for BT to handle. But the huge market share and subscriber base is an upside.
"It's a very smart move from a strategic point of view to launch quad-play, and they picked an asset they know the value of very well," Vincent Maulay, an analyst at Oddo & Cie. in Paris was quoted by ValueWalk.
"Additional debt burden from a potential acquisition may weigh on BT's ability to aggressively bid for content," Erhan Gurses, an analyts at Bloomberg Industries added.