Orange and Deutsche Telekom to delay EE IPO
17 January 2014 | Kavit Majithia
Orange and Deutsche Telekom have delayed the flotation of EE, with the view of gaining a higher valuation once 4G services take off in the UK.
The companies had been working on a solution for EE for over a year, and the decision to delay was based on a strategic review which concluded it was not the right time to sell the mobile operator.
Both companies believe the value of EE will rise, as more subscribers adopt high-margin mobile data packages as 4G takes off.
“The shareholders have both agreed that the best option for value creation is to maintain the current ownership structure for the time being, and they look forward to continuing their co-operation in the UK market,” said a joint statement to the Financial Times.
According to analysts, EE could potentially carry an enterprise value of over £10 billion, and the reversal was unexpected given the amount of companies in the market looking to raise capital.
IPOs in Europe last year were strong, with volumes reaching approximately $35 billion, and the UK is said to be at the forefront of the growth.
The Financial Times suggests private equity groups could now be tempted to bid for the company, skipping the IPO process altogether.
EE has signed up 2 million 4G customers in the UK, and the company remains confident it can lead in the 4G market.
Deutsche Telekom could be reluctant to reduce its global operations through the sale of both its UK and US subsidiaries, however, with US player Sprint reportedly preparing a bid for T-Mobile US this year.
AT&T has also been linked with a bid for EE, after the company confirmed its interest in entering the European market last year.
3h | Alan Burkitt-Gray
4h | Alan Burkitt-Gray