Telecoms group BT has bought the mobile firm EE, and current market leader, for £12.5bn which could lead to cheaper deals for customers.
BT said it would raise £1bn through a placing of new shares to fund the deal, after weeks of exclusive talks with the owners of EE, Orange and Deutsche Telekom.
“This is a very exciting time and a new chapter for BT,” said Gavin Patterson, chief executive of BT, and hailed the deal as a “major milestone”.
Deutsche Telekom will hold 12 per cent in the new merged business and will have a seat on the board, while Orange will get a 4 per cent stake, as well as around £3.4bn in cash.
Following the takeover, BT will be able to sell its fixed telephone, broadband and TV services to EE's customers and accelerate its plans to offer interconnectivity between fixed Wi-Fi and high-speed fibre networks with mobile 4G technology.
"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," said Patterson.
EE leads the market in 4G, the fastest mobile bandwidth. It said its 4G customer base had risen to 7.7 million subscribers.
The deal comes as the telecoms sector is shaken up by various talks and agreements from rivals in a bit to secure their positions.
UK’s second-largest mobile provider O2 is set to be bought by Hutchison Whampoa, the owner of competitor Three, for up to £10.25bn in a move that could create the UK’s biggest mobile group, pushing Vodafone into the last place.
The Hutchison Whampoa deal has raised concerns about reduced competition as it would cut the number of major operators from four to three, which might be detrimental for consumers and prices.