BT 2015 Annual Report Download - page 53

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Overview
The Strategic Report
Purpose and strategy Delivering our strategy
0ur lines of business Group performance Governance Financial statements Additional information
EE acquisition: risks
ur proposed acuisition of  creates additional riss
for  beond those captured in our principal riss and
uncertainties. n the section below we hihliht those
riss relatin to the acuisition and new riss that would
be relevant to the enlared roup. e described these
riss in the shareholder circular in relation to our proposed
acuisition of  and repeat the below.
Risks related to the acquisition
n the period throuh to copletion of the acuisition there are
riss relatin to the deal itself as well as business riss durin this
transitionalphase.
pproval of the acuisition
opletion of the acuisition is conditional upon satisfaction or where
capable of bein waived waiver of various conditions. n the event that
these conditions are not satisfied or where the can be waived waived
b the lon stop date or a later date which we aree with the sellers
the hare urchase reeent will autoaticall terinate. here can
be no assurance that the conditions will be fulfilled or waived or that
theacuisition will be copleted.
he acuisition is subect to erer control approval fro the
opetition and arets uthorit  in the UK. pproval fro
the  a tae loner than epected to obtain a not be ranted
ora be ranted subect to conditions or reedies includin s
or s divestent of assets or businesses andor restrictions on the
conduct of the enlared roup. n of these could dela or eopardise
copletion ipose sustained additional costs for the enlared roup
andor ateriall reduce the anticipated benefits includin sner
benefits of the acuisition or result in a aterial adverse eect on the
enlared roups business financial condition and results of operations.
s perforance prior to copletion of the acuisition
he anticipated benefits and sneries of the acuisition have been
developed based on assuptions reardin aon other thins
sfinancial and operational perforance includin in the period
before copletion when s perforance is outside our control.
urinthis tie s perforance  and that of   could be
neativelipacted b one or ore of the followin
 an adverse event or events aectin  which would not ive rise
toariht of  to terinate the acuisition
 as a result of the planned acuisition soe of s or s custoers or
strateic partners a terinate or reduce their business relationships
with the enlared roup for eaple to avoid sourcin too reat a
proportion of services fro a sinle copan
 potential custoers of  or  a dela enterin into or decide not
to enter into a business relationship with  or  until copletion
because of perceived uncertaint over the acuisition
  a fail to retain e personnel and other eploees and
 third parties a terinate or alter eistin contracts with  as a
result of the acuisition in particular where chane of control or
siilar clauses appl.
f an of these happen the value of  a be less than the
consideration paid b  and accordinl the net assets of the enlared
roup could be reduced. his could have a aterial adverse eect on the
enlared roups financial position.
ealisin sneries followin interation
 is taretin sinificant sneries fro the acuisition. he financial
plannin for the enlared roup is based partl on realisin these
sneries which include epected operatin cost savins and capital
ependiture savins of 0 per ear to be realised in the fourth
full ear followin copletion. obinin the respective businesses
is also epected to ive rise to further benefits. hese include aon
other thins fied-obile converence the abilit to serve custoers
throuh a sinle sealess platfor supported b a sinle  networ
and bein able to oer  products to  custoers and  products
to custoers.
he success of the enlared roup will depend in part on the
eectiveness of the interation process and the abilit to realise the
anticipated benefits and sneries fro cobinin the businesses.
oe of the potential challenes in cobinin the businesses a not be
nown until after copletion. f these challenes cannot be overcoe
for eaple because of unforeseen diculties in ipleentin fied-
obile converence or a lac of custoer deand for the oerins
theanticipated benefits of the acuisition will not be full achieved.
ealisation of sneries will depend partl on the rapid and ecient
anaeent and co-ordination of the activities of the enlared roups
businesses. e a eperience diculties in interatin  with
our eistin businesses and a not realise or it iht tae loner
than epected to realise certain or all of the perceived benefits of
the acuisition. here is also a ris that sner benefits and rowth
opportunities fro the acuisition a fail to aterialise or a be
ateriall lower than have been estiated. n addition the costs of
eneratin these sneries which are epected to be around 00
a eceed epectations.
ailure to deliver the anticipated sneries and business opportunities
could have a aterial adverse eect on the enlared roups businesses
financial conditions and results of operations includin its abilit to
support its pension deficit.
Increased cost of debt
he enlared roup a face increased costs when it sees to refinance
or repa its debt as a result of its increased level of debt followin the
acuisition.
he acuisition will be funded in part b a .bn debt bride facilit
which a be etended for an additional 1 onths followin its one
ear aturit.
he costs and other ters on which the enlared roup is able to
refinance the debt bride facilit and other loner-ter indebtedness
will depend partl on aret conditions unfavourable econoic
conditions could ipact the cost and ters on which the enlared
roupis able to access capital arets to refinance its indebtedness
which a increase its cost of capital.
Risks to the enlarged business
lthouh a nuber of the riss  faces are siilar in nature to those
potentiall ipactin  toda there are also a nuber of distinct riss
that the enlared roup will face that we do not currentl perceive to
besinificant threats to .
his section outlines soe of those new riss and uncertainties butit
is not ehaustive. hese riss have the potential to ipact the enlared
roups business brand people assets revenue profits liuidit
orcapitalresources.
ur nterprise is anaeent fraewor will continue to operate in
the enlared roup and provides reasonable but cannot ive absolute
assurance that sinificant riss are identified and addressed. here
a be soe riss which are unnown to us at present. nd there
a be soe that we consider less sinificant now but becoe ore
iportantlater.