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O2 weighing up London IPO




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Spain’s Telefónica is soon to announce a decision on how it intends to proceed with the O2 IPO.

Telefónica Chief Executive José María Álvarez-Pallete told reporters in Spain last week that Telefónica would retain control of the UK mobile phone network, but that it has yet to decide between an IPO or selling a stake. José has asked the banks to speed up the preparatory work, hoping to list O2 in December if market conditions allow, the sources said. They ruled out a listing in November as the deal remains in the early stages and the US presidential election on 8th November is seen as a potential trigger for market turmoil. The deal may be delayed to the first quarter of 2017 in the event of market uncertainty.

Spanish telecoms company Telefónica is looking to list about 30% of its British mobile unit O2 in what would be one of the biggest IPOs on the London market for 2016 if it goes ahead. There is no confirmation yet that this will take place.

Europe's biggest telecom group wants to use the relative market calm after the turmoil caused by June's Brexit vote to cut its stake in Britain's second-largest mobile firm, which could value O2 at about £10bn ($13bn), sources said. 


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History of Telefónica and O2

Telefónica has been reviewing strategic options for O2 since a sale (£10.3bn) to CK Hutchison Holdings was blocked by Europe's antitrust watchdog in May 2016. Telefónica has decided to retain control of O2 rather than sell it all, despite its efforts to cut down its €50bn of debt.

O2, which has more than 25 million customers, has long been on the radar of private equity funds, but their ambitions were stymied by Britain's vote to leave the EU.

2017 Update

In February 2017,Telefónica sold a €1.3bn (£1.1bn) stake in its infrastructure division Telxius Telecom to venture capital firm KKR. Pundits claim that the sale will allow the company to refocus on the sale of O2, in addition to helping relieve some of the company's €47bn debt. With market conditions having improved markedly since Telefónica pulled the potential float in October 2016 - citing market difficulties - it seems that O2 IPO could be on again.

 

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