November 15, 2012 5:57 pm

France Telecom open to EE listing

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France Telecom has opened the door for a flotation next year of EE, the UK’s largest mobile phone group by customer numbers that it owns with Deutsche Telekom.

Gervais Pellissier, deputy chief executive of France Telecom, said that there “could be some space at the end of next year” for a flotation, although he added the parent companies would remain the majority controlling shareholders.

The group has not appointed advisers for an IPO process, which is seen internally as more likely than a sale to private equity. The earliest window would be at the end of next year, said those familiar with the plans, although there is no precise target. Mr Pellissier told a conference in Barcelona that there was no urgency.

The comments will spark considerable interest among investors and advisers in a company that analysts have given an enterprise value of more than £10bn. EE, which operates under its own brand as well as Orange and T-Mobile in the UK, has already attracted interest from private equity.

Neither company has indicated a timetable to sell any stake. Any sale, even of a minority stake, would also raise a significant sum of cash at a time when the parents are operating in tough markets elsewhere.

The timing would allow the two companies to take advantage of the six month-long monopoly that EE has in the UK market in offering superfast 4G mobile broadband. Mr Pellissier said that the 4G network being rolled out by EE had some initial access issues but he was confident it would be successful.

By the end of next year, EE will also have made significant progress in delivering the predicted cost savings of £3.5bn from the merger of Orange and T-Mobile in the UK.

Tom Alexander, former chief executive of EE, has been in talks with private equity groups such as Apax and KKR about leading a buyout. There is still private equity interest in the group, people with knowledge said, but financiers have said a public listing could raise more money.

Mr Pellissier added that France Telecom would not welcome any attempt to merge its business with that of Deutsche Telekom, but he acknowledged that politicians had spoken about this.

France Telecom is also interested in bidding for Spanish telecoms group Yoigo.

The move comes during some aggressive corporate activity in the sector, not least from Egyptian telecoms tycoon Naguib Sawiris. Marco Patuano, chief operating officer at Telecom Italia, confirmed that a letter from Mr Sawiris offering to support a capital increase had been received.

He indicated that consideration of the bid would depend on whether Telecom Italia decided to press on with a mooted bid for GVT, the Vivendi-owned Brazilian telecoms group. If not, he said, “there was not such a need” for new equity given the company’s existing cash flow could cover its strategy to reduce debt.

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