EE Plans for 5G, Drones in 1.5 Billion-Pound Network Upgrade

EE Ltd., the U.K.’s biggest mobile-phone operator, will spend 1.5 billion pounds ($2.3 billion) in the next three years as part of a program to improve wireless coverage and develop new technologies like fifth-generation networks and drones to improve signals in hard-to-reach areas.

The funds will expand high-speed 4G technology to 99 percent of the population by 2017 and improve service in rural areas, the company said today. EE -- jointly owned by Germany’s Deutsche Telekom AG and France’s Orange SA -- is increasing network spending as it prepares to merge with BT Group Plc.

In the first half of the year, EE will begin offering calls over Wi-Fi networks, which is useful in places where mobile signals aren’t available, Chief Executive Officer Olaf Swantee said in London on Tuesday. EE will also explore a system it calls air masts, putting equipment on balloons or drones to improve signals in places where building a mobile tower would be too expensive or difficult.

“In the U.K., there are still many places where you can’t make a phone call,” Swantee said. “We want to solve that.”

EE plans to extend its coverage area using voice-over-4G technology, which channels phone calls over a data network, making the sound clearer. The company is also investing in research to develop technology for 5G, the generation of mobile networks expected to become available by about 2020.

BT, the biggest fixed-line provider in the U.K., agreed to buy EE in December for 12.5 billion pounds. The combination has kicked off a wave of merger talks in the U.K. with rivals exploring their own deals to bulk up.

Telefonica SA’s O2 is in discussions with Hutchison Whampoa Ltd.’s Three to potentially create a bigger mobile operator than EE. Sky Plc, the biggest pay-TV company in the U.K., has reached a deal with O2 to resell mobile service to customers, and Vodafone Group Plc is considering options including a merger with Liberty Global Plc, people familiar with the matter have said.

The biggest advantages of EE’s merger with BT will be the ability to cross-sell services to customers, to offer bundled service packages -- including Web, mobile and phone service -- to corporate subscribers and to make the fixed and mobile networks work together more efficiently, Swantee said.