Business Technology

Tuesday 6 December 2016

Stock market float on cards after Dunne's O2 deal blocked

€11bn MBO played down, but future flotation or IPO could yet be in the offing, writes Dearbhail McDonald

Published 22/05/2016 | 02:30

Outgoing 02 chief Ronan Dunne
Outgoing 02 chief Ronan Dunne

A stock market flotation of O2, the UK mobile business led by Dubliner Ronan Dunne, is emerging as the preferred option for the telecom giant's future, the Sunday Independent has learned.

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Dunne, the Telefonica UK (O2) chief executive was linked with a potential £8.5bn (€11bn) management buyout of the company last week.

The MBO has been dismissed by sources close to the company as "premature", but Dunne has been inundated with expressions of interest from private equity firms since the blocked takeover of 02.

Earlier this month, the European Commission blocked a planned €13bn sale of 02 to CK Hutchison, the owner of Three, a move that would have left the UK with just three major mobile phone network operators.

Dunne vowed to leave O2 had the merger been approved and was contemplating a series of job offers in the US and Europe on foot of any departure. However, he is now likely to remain with the Telefonica-owned company as it assesses a series of proposals.

Spanish giant Telefonica refused to be drawn on the identities of the consortia that have submitted expressions of interest.

However, it is understood that they include private equity firm CVC Capital Partners, one of the world's leading private equity investment firms which has already dabbled in the telecoms sector. Last March, shares in Swiss-listed telco Sunrise Communications soared after CVC sold its stake to German mobile telecommunications Freenet for €714m.

Telefonica and Hong Kong-based Hutchison are bound by an exclusivity agreement until the end of next month.

However, Dunne and his team are assessing offers for O2, one of the UK's biggest brands which has a 25 million strong customer base.

Dunne, who spent last week meeting thousands of O2 staff in Twickenham to brief them on the firm's future, and his local management team are to remain in situ in the event of a future IPO or flotation.

O2 confirmed that a number of different options are being considered by Telefonica.

"In the meantime, the O2 business continues to perform well in the market," it said. "Our customers are our priority and we will continue to differentiate, compete fiercely and remain successful, long into the future".

Sunday Indo Business

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