ANALYSIS: Is EE up on the block?

30 August 2013 |

The future may be bright, but it’s also highly uncertain.

Orange and Deutsche Telekom’s partnership has culminated in the launch of Britain’s largest mobile telecoms company – EE – so why are its parent companies so eager to sell up?

Rumours have been rife in the market over the past year that EE to be subject to either a record-breaking IPO in the UK, or a high-scale private equity buyout. France Telecom and Deutsche Telekom have kept relatively quiet regarding the speculation.

“If they sold off 70% of the company, they would still be one of the biggest shareholders. That could be logical. They would want to keep their foot in the door,” said Steven Hartley, analyst at Ovum.

“At the same time, the reason they combined in the first place was because both brands were, relatively speaking, struggling in the UK market. An IPO could signal a clean break for them, out of the UK.”

The joint venture has 27 million subscribers and has made a £1.5 billion investment in 4G mobile services to date, with analysts and industry insiders left scratching their heads as to why the mobile behemoth is now eyeing up a potential exit. In late July, the CFO of Orange Group, Gervais Pellissier, played down rumours that EE could seek an IPO in 2013.

It is unclear whether the owners will continue to hold some investments in EE after it is sold, or whether the companies will simply leave the market completely. Deutsche Telekom has been equally coy, suggesting only that it is open to any possibilities.

A spokesperson said: “EE is moving in the right direction and we see considerable operational upside. No final decision has been taken as of yet but we can say that nothing is to be expected in 2013.”

EE told Capacity that it wanted to leap ahead of its rivals in the 4G market, having noticed a major opportunity in the development of super-fast connectivity, while the rest of the UK continued to focus its efforts on 3G.

It refused to comment on the market speculation.