Telefónica "will not float O2 UK until 2017"

By:
James Pearce
Published on:

UK boss says Spanish parent company is "prepared but not committed" to a 2017 IPO

Telefónica is unlikely to launch an IPO of its UK arm until 2017 due to market conditions, according to O2 CEO Mark Evans.

Evans, who took the reins at O2 UK over the summer, said Telefónica was “prepared but not committed” to floating its UK assets in a deal expected to raise around £10 billion for the Spanish telco.

Speaking after Telefónica’s latest financial results, Evans said the touted sale of O2 would be dependent on the performance of the UK economy, and could be impacted by UK government plans to leave the European Union following June’s referendum.

“An IPO is a real and distinct opportunity for this business,” said Evans, in a briefing before the company’s third-quarter results, released on 27 October.

“It is being prepared for, as opposed to committed to. I’ll draw that very clear distinction. What you’ve seen over the course of the last six to eight weeks is the market going into some flux. Softening.”

Evans, who was CFO prior to his appointment as CEO in August, said O2 had suffered due to a number of outside influences, including the weakening of the pound in the aftermath of the Brexit vote.

Telefónica has been attempting to offload its UK arm in a bid to alleviate a €50 billion stockpile of debt. Last year, the Spanish operator reached a £10.25 billion deal with CK Hutchison to merge O2 with the Hong Kong giant’s Three UK assets in a move that would have created the biggest operator in the country.

In May, the European Commission blocked the sale, citing competition concerns, leading to speculation over a potential IPO, something Telefónica has refused to rule out.

It would not be the only IPO Telefónica has delayed or cancelled if it does not go ahead with the sale. Earlier this month, the Spanish firm cancelled the flotation of infrastructure arm Telxius, citing a lack of market interest.

“We’ll decide in 2017 if it’s right to move ahead with an IPO,” Evans added. “Market conditions will undoubtedly have a part to play. It won’t be the only assessment.”