Orange, Deutsche Telekom still pursuing EE IPO

Orange and Deutsche Telekom have not abandoned plans to float their UK joint venture EE, the French operator's chief financial officer said.

Orange CFO, Gervais Pellissier

Orange CFO, Gervais Pellissier

Gervais Pellissier told journalists an IPO remains the preferred option for EE, and that the two parent companies will re-evaluate the pros and cons of such a move after the summer, Bloomberg reported. Pellissier said EE's chief executive, Olaf Swantee, has been asked to focus on the joint venture's dividends, returns, or growth over the next six months, Bloomberg added.

However, Pellissier--who is due to take over management of Orange's European business in September, when finance expert Ramon Fernandez takes on the CFO role--noted the IPO plans could change if UK rivals start selling bundled services comprising internet, TV, and voice; if this did happen, EE would have to do the same, he said.

Orange and Deutsche Telekom put plans to float EE on hold in January, following a strategic review of the UK business that concluded its financial performance was on track.

In a joint statement sent to FierceWireless:Europe at the time, the operators explained that they had "agreed that the best option for value creation is to maintain the current ownership structure for the time being."

EE's turnover fell 3.6 per cent year-on-year to £1.54 billion (€1.8 billion/$2.5 billion) in the opening quarter of 2014, on a 1.7 per cent decline in operating revenue when including the impact of regulatory changes. Without those changes, the company's operating revenue grew a marginal 0.8 per cent year-on-year.

The UK operator revealed in late May that LTE contract sales had exceeded 3G sales for the first time. The company had signed up 3.6 million LTE subscribers by that point, meaning it is more than halfway towards achieving its target of 6 million LTE subscribers by end-2014.

According to reports in early May Orange is also discussing a merger with Bouygues Telecom in its domestic market, where a fierce price war has taken place since the entrance of Iliad-backed Free Mobile in 2012. Reuters also reported this week that Orange is understood to have hired investment banks Lazard and Credit Suisse to assess a potential purchase of Bouygues Telecom, a deal that sources say could top €6 billion ($8.2 billion).

Orange CEO Stephane Richard last month added his voice to calls for consolidation in the French mobile market, after a sale of SFR by Vivendi failed to reduce the number of operators.

For more:
- see this Reuters article
- see this Bloomberg article

Related Articles:
Deutsche Telekom, Orange hold fire on EE IPO
Orange appoints France's treasury chief Ramon Fernandez as CFO
Orange, Alcatel-Lucent CEOs reiterate pleas for French consolidation
France pushes for just 3 operators as Orange raises concerns over SFR deal
EE contract LTE sales outstrip 3G for first time

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