As part of the deal, Deutsche Telekom will have 14% of the shares in the UK incumbent, and the company is expected to bid for all of BT – but it cannot do that before 2019.
Orange will have 4% of BT and no board member. Orange and Deutsche Telekom owned UK mobile operator EE as a 50-50 joint venture following the merger of T-Mobile UK and Orange UK in 2009.
BT will announce details of its new structure when it presents its quarterly results on 1 February.
However, BT is now expecting Ofcom, the UK regulator, to make significant changes to its relationship with Openreach, its division that operates BT’s last-mile network. BT competitors, including TalkTalk, Sky and Vodafone, are supposed to have access to Openreach on the same basis as BT Retail, but have long complained about the service they get from the unit.
BT said in its prospectus for the issue of new shares that three of the models being considered by Ofcom are “strengthening the existing model of Openreach’s functional separation, the structural separation of Openreach, and substantial deregulation and greater reliance on end-to-end competition” but says they “would have an impact on the way in which the group conducts its operations and on its revenues and costs”.
BT warns that, “given the status of the [Ofcom] strategic review, its outcome, the risks and opportunities posed to the group and the extent of any impact on the group’s operations, revenue and costs remain uncertain.”
Ofcom has not yet disclosed when it will publish its strategic review, but it is expected in February.
