Procurement to help deliver £70 million savings in BT/EE merger deal

Will Green is news editor of Supply Management
9 February 2015

Procurement will contribute to annual savings of £70 million as part of BT’s deal to buy mobile network EE.

BT said consolidating sales and marketing operations and procurement efficiencies would generate the savings, while insourcing will contribute to further savings of £90 million in IT and £80 million of efficiencies from network integration.

Operational savings of £120 million will be achieved by combining head office functions and customer service operations.

The telecoms company has agreed terms to acquire EE, which is jointly owned by Orange and Deutsche Telekom, in a £12.5 billion cash and shares deal. Following the deal Deutsche Telekom will take a 12 per cent stake in BT and Orange 4 per cent.

BT expects the acquisition to deliver total savings of around £360 million a year. The firm said: "BT brings its tried and tested approach to cost transformation, which uses forensic analysis to redesign processes to remove inefficiency, reduce the cost of failure and improve customer experience. EE has demonstrated its ability to deliver post-transaction synergies ahead of initial expectations following the merger of Orange and T-Mobile. BT is confident it can use the combined experience to unlock significant synergies across the enlarged group."

Gavin Patterson, BT chief executive, said: “The deal provides an attractive opportunity for BT to generate considerable value for shareholders, with significant operating and capital investment efficiencies supported by our tried and tested cost transformation activities.”

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