EE holds 33.8 per cent of the British mobile market in terms of service revenue

EE confirms takeover talks with BT

EE’s owners have confirmed they have entered talks to sell the mobile network to BT as part of a wider review of its options.

BT announced on Monday that it was in talks with both Telefonica's O2 and a rival operator that sources had identified as EE, the UK’s biggest mobile operator, which is owned by Deutsche Telekom and Orange.

“Deutsche Telekom and Orange, the joint shareholders of EE, regularly analyse the development of the market in which EE operates, evaluating various strategic options which have the potential to create value for EE's shareholders and strengthen the market position of EE," the partners said.

"As one of these options, Deutsche Telekom and Orange are in exploratory discussions with BT, although it is too early to state whether any transaction may occur."

Orange and Deutsche Telekom have previously looked at whether they should list EE on the stock market, but put plans for an initial public offering of EE on ice earlier this year.

Analysts believe EE, which holds 33.8 per cent of the British mobile market in terms of service revenue and is the clear leader in 4G mobile broadband services, could cost BT roughly £10bn, while O2 with a 26.2 per cent market share could cost it nearer to £9bn.

O2 was demerged from a heavily indebted BT via a share flotation in 2001 and subsequently bought by Telefonica in early 2006, but the fixed-line operator wants to get back into the mobile market to take advantage of the recent trend for bundle packages, offering fixed line and mobile broadband and pay-TV services.

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