Telefónica appoints adviser to support possible IPO for O2 UK

José María Álvarez-Pallete López, Telefónica
Telefónica executive chairman and CEO José María Álvarez-Pallete López

Telefónica is putting the pieces together for a possible initial public offering (IPO) for its UK mobile unit, lining up a team of bankers and advisers to support a transaction that reports say could value O2 UK at £10 billion (€11.5 billion/$13 billion).

The Telegraph reported that lead bankers so far include Barclays, UBS and Morgan Stanley. Telefónica also confirmed that it has just appointed city public-relations adviser Finsbury.

“Telefónica announced earlier this month that it is considering strategic options with respect to us here in the UK, including, among others, a potential initial public offering. As part of that exercise to ensure that we are prepared, should we decide to move forward, we have engaged Finsbury to support us,” said an O2 UK spokesperson in a statement emailed to FierceWireless:Europe.

Spain-based Telefónica said earlier in September than an IPO was one of several options it is considering for O2 UK following the failure of plans to sell the mobile arm to CK Hutchison.

The operator said in June that it had abandoned plans to sell O2 UK, and that it would reinstate the businesses results into its group earnings statement from the second quarter of 2016 onwards.

However, it remains under pressure to reduce its heavy debt burden and has already announced plans to list at least 25 per cent of tower unit Telxius by the end of 2016. A listing of O2 UK shares would also enable the operator to raise further much-needed funding.

If an O2 IPO does go ahead, it is likely to take place early in 2017 according to previous comments by Telefónica executive chairman and CEO José María Álvarez-Pallete López. It’s not yet clear how much of O2 UK would be floated on the market, but Telefónica is understood to want to retain a controlling stake.

It already has experience of such a transaction in Germany: the Spanish group owns 63 per cent of Telefónica Deutschland, which has been listed on the Frankfurt Stock Exchange since 2012 and on the TecDAX since 2013.

O2 UK also owns the Giffgaff brand as well as a 50 per cent stake in mobile virtual network operator (MVNO) Tesco Mobile.

For more:
- see this Telegraph article
- see a This is Money article

Related articles:
Telefónica confirms IPO as one option on table for O2 UK
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Telefónica plans to keep O2 UK; will reinstate operation in Q2 2016 earnings
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