EE’s £10bn flotation put on hold sparking rumours of outright sale

Joint owners claim they want to expand 4G roll-out first

Britain’s biggest phone operator, EE, has had its partial flotation put on hold by owners France Telecom and Deutsche Telekom, in a surprise postponement that comes more than a year after IPO plans were first unveiled. Earlier this month [January 2014] EE, which embraces the T-Mobile and Orange brands, revealed how its number of 4G customers had passed the two million mark. But EE’s joint owners now say they want the operator’s high speed service to become even more entrenched so that, as and when a flotation does go ahead, EE will attract a higher valuation. So far only 7 per cent of EE’s customers are on 4G tariffs.

But the move to shelve what could have been London’s largest initial public offering could point to a more seismic shift behind the scenes.

For instance, US giant AT&T is known to want to expand beyond its own shores, though until now it has been widely believed that it had Vodafone in its acquisition sights.

However, Vodafone wouldn’t come cheap, all the more so now that it is cash rich from the recent sale of its 45 per cent stake in America’s Verizon Wireless, keeping both dividend pay-outs and its share price high.

That in turn could make EE, with its 27 million subscribers, all the more attractive as an acquisition if France Telecom and Deutsche Telekom decided to sell.

Adding to the intrigue is the fact that the pair are known to need cash, making it all the more surprising that they should opt to defer EE’s IPO which would have not only been one of London’s biggest but likely to have raised around £10 billion.

Since its creation by the merger of T-Mobile and Orange, EE (formerly Everything Everywhere) has also been busy trimming costs – laying off thousands of staff as it closed surplus retail stores.

Although that alone could make it more appealing to a predator such as AT&T.

Meanwhile France Telecom and Deutsche Telekom are rumoured to be selling their own US assets, possibly paving the way for a share swap with AT&T and in turn a deal for EE.

About Dave Evans

Dave Evans was a long established commentator on both the IT and cellular industries. His last focus was on share price trends within the sector. He passed away in September [2014].
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