Reports: Deutsche Telekom and Orange revive talks on EE sale or IPO

A flotation or possible sale could be back on the agenda for EE after reports said parent companies Deutsche Telekom and Orange have resumed talks about the future of their UK joint venture.

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Gervais Pellissier, Orange's deputy CEO

Quoting unnamed sources, Bloomberg said the UK operator could be valued at up to €15 billion ($19 billion), with an initial public offering (IPO) in 2015 seen as the most likely scenario. However, a sale of the company is also still one of the options under consideration, the report said.

Orange and Deutsche Telekom had 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 June, however, Orange deputy CEO Gervais Pellissier--who assumed responsibility for the joint venture in September--said an IPO remained the preferred option for EE, and that the two parent companies would re-evaluate the pros and cons of such a move after the summer.

Pellissier also noted that any plans for EE would change if UK rivals started selling bundled services comprising internet, TV, and voice; if this did happen, EE would have to do the same, he said.

Since then, the operator has signalled plans to launch a new home TV service--EE TV--in the autumn. This in turn could move the operator further towards a full-scale "quadruple-play" strategy, involving the sale of mobile plans combined with fixed voice, broadband and TV services.

Although rivals such as Vodafone UK, O2 UK and Three UK are not yet pursuing this strategy in the consumer market, BT's plans to enter the consumer mobile market will throw up new challenges in the multi-service arena.

Since it first launched its LTE services in the UK, EE has been a formidable competitor to UK operators, and has also since swallowed up the former Orange UK and T-Mobile UK brands.

The company doubled its LTE subscriber base to 4.2 million in the first half of 2014, and in July said it remains on track to meet its target of 6 million LTE subscribers by the end of the year.

Nonetheless, despite this strong LTE growth the company's operating revenue growth remained fairly muted in the first half. Turnover was down 3 per cent compared to the previous year, reaching £3.1 billion (€3.9 billion/$5.2 billion). Operating revenue declined by 1.3 per cent to £2.99 billion.

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

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