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BT has agreed a deal with US mobile phone firm Verizon to merge their international businesses to create a joint venture with annual sales of around four billion US dollars (£3 billion).

Under the deal, Verizon will pay a so-called equalisation payment of 625 million US dollars (£473 million) to BT and both firms will be equal shareholders in the combined company.

The joint venture will serve more than 3,000 customers across over 180 countries.

BT has been looking to spin off its struggling international businesses for some time as it looks to refocus on the group’s domestic UK market.

It has been gradually reducing its overseas business as part of wider cost-cutting plans, recently selling off its troubled Italian business and previously agreeing the sale of its Irish wholesale and enterprise business unit.

BT recently unveiled plans to increase cost cutting to £3.7 billion over the next four years, with up to 55,000 jobs worldwide being axed as part of the overhaul.

The tie-up with Verizon will be incorporated in Jersey but headquartered and tax resident in the UK.

It will be headed up by former Telstra executive Martijn Blanken, who has been appointed chief executive designate and is set to join BT on September 1 ahead of the deal completing, which is expected in 2027.

Clive Selley will continue to lead BT International as chief executive ahead of the transaction, while Verizon’s leadership remains unchanged with both businesses operating independently until the deal completes.

Allison Kirkby, chief executive of BT Group, said: “Today’s announcement marks a major milestone for BT International, and an important step forward for BT as a whole, as we deliver on our UK-focused strategy.”

She said the move will bring together BT’s “expertise and heritage with Verizon’s deep relationships with multinationals”.