Bloomberg News

Deutsche Telekom, Orange Call Off IPO of U.K. Mobile Venture (2)

January 17, 2014

Pedestrians Pass an EE Mobile Phone Store in London

Pedestrians pass an EE mobile phone store in London. Photographer: Simon Dawson/Bloomberg

Deutsche Telekom AG (DTE) and Orange SA (ORA) have called off a plan to sell shares in their 50-50 U.K. wireless venture -- potentially one of the biggest British initial public offerings this year.

The companies agreed to end a strategic review of the unit, called EE, which had included options such as the sale of a minority stake, Andreas Leigers, a spokesman for Bonn-based Deutsche Telekom, said by phone today. Orange said in a statement that shareholders agreed to keep the current ownership structure as the “best option for value creation.”

“There is no timeline on what will happen next,” Leigers said. An expansion of EE’s faster fourth-generation wireless services may increase the value of the business, he said. “We will no longer pursue an opening of EE’s capital or an IPO.”

Bloomberg News reported in September that the parent companies had slowed their efforts to dispose of EE shares as Europe’s telecommunications industry braced for a possible entry of AT&T Inc. AT&T has weighed deals for Vodafone Group Plc and EE to benefit from Europe’s rollout of faster, fourth-generation networks that will increase customers’ data use, people familiar with the company’s thinking said last year.

An EE spokeswoman declined to comment beyond the parent companies’ statements.

Median Multiple

The median multiple paid for telecom companies in deals exceeding $1 billion in the last year was about 6.6 times earnings before interest, depreciation and amortization, based on eight deals surveyed by Bloomberg. EE’s Ebitda for 2012, before 4G was widely deployed, was 1.9 billion pounds ($1.8 billion), implying a sale value of 7.2 billion pounds. The company will report its results for 2013 next month.

EE and AT&T signed a roaming agreement in the U.K. last month that lets the Dallas-based company’s customers roam on EE’s 4G network. EE was the first company in the U.K. to roll out the new network technology, using spectrum it already owned while carriers such as Vodafone and Telefonica SA’s O2 were forced to wait several months for a government auction. The company’s service now covers about 70 percent of the population.

Deutsche Telekom has said it’s prepared to dispose of its 67 percent stake in T-Mobile US Inc. Potential buyers include SoftBank Corp. and Charles Ergen’s Dish Network Corp.

Deutsche Telekom’s wireless-only operations in the Netherlands and Austria aren’t under review, Leigers said. The former German phone monopoly, which owns or controls operators from Greece to the U.S., has a strategy of combining landline and mobile offerings in its markets.

The Financial Times reported yesterday that EE’s share-sale plan had been put on hold.

Deutsche Telekom rose 0.1 percent to 12.46 euros at 1:30 p.m. in Frankfurt. Orange climbed 0.4 percent to 9.66 euros on the Paris exchange.

To contact the reporters on this story: Cornelius Rahn in Berlin at crahn2@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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