BT has entered exclusive talks with Orange and Deutsche Telekom to buy EE for £12.5bn, opting for the operator over rival suitor, Telefonica's O2.

BT had been in talks with Telefonica and EE's owners since late November about a deal to buy one of the operators, putting the British telecom firm in an unusually strong position to secure a deal to take it back into the consumer mobile market.

BT said that if the deal completes Deutsche Telekom would hold a 12% stake in BT and would be entitled to appoint one board member, whereas Orange would hold a 4% stake.

The French and German companies each own 50% of EE.

BT previously operated in the mobile market under the Cellnet brand, but undertook a demerger in 2001, with the mobile firm eventually becoming Telefonia's O2.