EE pays £400m dividend to Orange and Deutsche Telekom

Britain's largest mobile operator EE paid shareholders Orange and Deutsche Telekom more than £400m last quarter ahead of its sale to BT that is expected before the end of its financial year.

EE needs to distribute 90 per cent of its free cash flow every half year to its joint owners in the subsequent first and third quarters. This led to a payment of £406m in the last three months.

EE on Monday said it remained the largest and fastest growing 4G mobile operator in Europe after adding 1.7m connections in the first three months of the year, down from 2m in the previous quarter.

The group's 4G customer base has reached 9.3m, which EE said was on track to reach a target of 14m 4G mobile customers by the end of the year.

Olaf Swantee, chief executive, said that the increase in 4G numbers showed that EE had taken Britain from a 4G "laggard to a leader" in Europe. He added that efforts to "cross sell" different services to its existing customers was working, with a 0.6 per cent growth in its total customer base to 30.9m.

Mr Swantee said that EE and BT were planning the integration of the two businesses, as well as working with the British competition authorities to secure approval for the $12.5bn deal in time for the end of the year.

Orange and Deutsche Telekom agreed to sell EE to BT for £12.5bn, with each receiving part payment in shares in the combined British telecoms group.

Operating revenues fell 1.1 per cent to £1.5bn compared with the same period last year as the group saw money charged to customers outside contracts such as extra voice and texts tail off.

Operating revenue rose marginally by 0.3 per cent excluding the impact of regulation, however, which reversed a drop of about 1 per cent in the fourth quarter.

EE said that the number of contract customers increased, which led to a rise in average revenue per user and helped maintain a relatively low rate of customer loss, or churn, of 1.2 per cent.

The group added about 50,000 fixed broadband customers in the quarter as it sought to build a business selling multiple products to its mainly mobile customers ahead of its sale to BT.

Analysts do not expect the likely deal to be blocked by antitrust authorities but have warned that BT might be forced to give up some spectrum or further open its network to other mobile services to win approval.

"Given that the BT-EE would not result in any material increase in retail market shares in either mobile or fixed broadband, we think the eventual approval is highly likely," said analysts at Jefferies. "Interest over the next year will focus on potential remedies, in particular how the CMA proposes that mobile be dealt with."

The UK's Competition and Markets Authority has not yet begun its phase 1 review.

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