O2 or EE? BT to announce preferred mobile operator in £10bn takeover “early next week”

Mobile operators EE and O2 will this week learn whether they have won the billions of British Telecom (BT) in a takeover deal.

 

Update: BT has confirmed it has entered into exclusive talks with EE

 

According to a report in The Sunday Times, BT has this weekend been finalising a deal one of the two operators, and will announce its preferred target for a takeover worth around £10bn early next week.

 

The battle for BT has intensified in recent weeks amid reports that both EE and 02 would be willing to accept a reduced offer including shares in BT as part of the takeover.

 

Cesar Alierta, chairman of 02’s Spanish owner Telefonica, flew into London on Thursday in order to thrash out a deal.

 

A deal with O2 would see the operator reduced to its original owner. BT sold of its mobile operations arm – then labelled MMO2 – in 2001.

 

With mobile added to its list of services, BT would be able to offer a “quadruple play” package to customers – landline, mobile, broadband and TV in one.

 

“Quadruple play” packages have been a success in Europe but James Barford, head of telecoms research at Enders Analysis, told City AM that the same consumer demand may not be present in the UK.

 

Barford said: “Many customers have signed up to “quadruple play” offers on the continent, but these are largely driven by aggressive discounts, with little evidence of actual consumer demand for the combination.”

 

Yet investors seem to have faith in chief executive Gavin Patterson’s plans. BT’s share price has risen 4.57 per cent since news of its interest in a return to mobile emerged in November.