EE IPO to be postponed with owners believing 4G adoption will increase value of operator
Deutsche Telekom and Orange have opted to postpone a planned Initial Public Offering (IPO) of EE because they believe the UK’s largest mobile operator will attract a higher valuation once it has signed up more customers to lucrative 4G contracts.
EE’s joint owners are believed to have been working on the IPO for more than a year but a strategic review conducted by the two companies concluded it would be the wrong time for the partial flotation. It has been speculated that EE could have had an enterprise value of £10 billion and analysts have suggested it could be London’s largest IPO.
EE IPO delayed
“Deutsche Telekom and Orange have concluded the 2013 strategic asset review of EE and are very satisfied with EE’s progress and financial performance under the leadership of CEO Olaf Swantee and his management team,” EE told TechWeekEurope. “Following this review, the shareholders have both agreed that the best option for value creation is to maintain the current ownership structure for the time being, and they look forward to continuing their successful cooperation in the UK market.”
The Financial Times reports that executives were disappointed by the potential valuations touted, but another possible reason for the delay could be that Deutsche Telekom is wary of reducing its global operations too quickly. Sprint is rumoured to be preparing a bid for T-Mobile USA later this year and Deutsche Telekom has reduced its stake in the operator to two thirds.
The postponement could reignite interest in a potential takeover by private equity firms, while EE is believed to be the subject of interest from AT&T, which is considering purchasing an operator in Europe, where most customers are not on data-based pricing schemes that are common in the US.
EE was the first UK operator to launch an LTE network, having received permission from Ofcom to use its 1800MHz bandwidth for 4G ahead of the Ofcom auction of spectrum. It has so far secured two million subscribers since it went live last November and coverage has expanded to more than 160 towns and cities.
Who are Britain’s mobile operators? Try our quiz!