Telefónica looks at floating UK mobile operation, report says

22 June 2016 | Alan Burkitt-Gray

Telefónica is studying proposals to float shares in O2 UK after last month’s rejection by the EU of a plan to sell it to CK Hutchison’s Three UK for £10.5 billion.

A report in the Financial Times says that Telefónica is talking with banks about a listing of O2 UK on the London stock exchange. The report cites, but does not name, “two people briefed on the situation”.

Reports after the European Commission’s decision said that Telefónica was also looking at private equity investment in the UK mobile operation, with investors such as Apax and CVC Capital Partners mentioned.

In early May the European Commission prohibited Hutchison’s proposed acquisition of O2 UK because it “would have led to a reduction in terms of choice and to higher prices and lower quality services for UK consumers than without the deal”. A merger would have reduced the choice of network providers for MVNOs, the Commission added.

No decision has yet been made on O2, said the FT, adding that a private equity sale is still an option.

Telefónica bought the O2 group in 2006 for £18 billion. The group then included operations in Ireland, the Netherlands and Germany as well as the UK. Telefónica still owns O2 Germany and O2 UK but the Irish and Dutch businesses have been sold. O2 was originally part of BT until the company was spun off as a separate quoted company in 2002.