Reports in the Telegraph claim Barclays, UBS and Morgan Stanley have been appointed to to the lead roster to sell of O2 UK, with PR firm Finsbury appointed in an advisory role.
The unit, which also includes mobile virtual network operator Giffgaff and a 50% stake in Tesco Mobile, is expected to be listed for around £10 billion, although reports claim Telefónica will retain a controlling stake in the mobile operator. It is claimed the Spanish firm will only look to sell between 25% and 49% of O2 UK.
It comes just months after the European Commission blocked a £10.25 billion buyout from Hong Kong telecoms giant CK Hutchison, which would have been merged with its own UK division, Three, to form the biggest mobile operator in the country.
After more than a year of negotiations, Brussels rejected the deal citing concerns around potential harm to competition. Had the merger been approved, it would have brought the number of mobile operators in the UK down from four to three.
City A.M. claims private equity firms are already circling around O2, with Apax Partners and CVC Capital locked in talks for a joint bid in the summer.
A spokesperson for O2 said: "In relation to recent media reports regarding Telefónica's United Kingdom subsidiary, Telefónica announces that it is considering various strategic options with respect to the above-mentioned subsidiary (all of which would involve Telefónica maintaining a majority shareholding), including, among others, a potential initial public offering. Preparatory work in connection with such strategic options has been initiated."
