O2 plans £10bn stock market listing in UK
TELECOMS giant O2 is poised to return to the London stock market in a deal that would value the company at £10.3bn.
The mobile phone operator, which is owned by Spanish firm Telefonica, had been expected to float towards the end of 2016 but it pulled out as several large businesses abandoned plans to list.
But O2 is now understood to be reviving its plans in the next few months in what would be the first major listing of 2017.
Investors are in a confident mood after the stock market soared to a new record high on the final day of trading of 2016.
The FTSE 100 index closed the year at 7142.83 – up 14.4pc on where it started in a rally that added £227.5bn to the value of Britain’s leading companies.
Guy Peddy, head of telecoms research at Macquarie, said: ‘Telefonica will look at a return to an IPO should the market allow in the first quarter of the year.
‘The advantage is O2 is a good brand and a really good company, it just needs a bit more investment capital to roll out its network.’
Experts said there could be a wave of flotations from technology and life sciences firms this year.
‘People are just cracking on with deals,’ said Sam Smith, chief executive of City broker FinnCap.
O2 owner Telefonica recently sought to sell the mobile phone company for £10.3bn to CK Hutchison, the owner of rival Three, but the deal was blocked by EU regulators.
Ofcom and the Competition and Markets Authority also claimed the merger would have harmed competition and consumer choice.
But Telefonica is lumbered with a heavy debt burden, and wanted to offload a portion of the business through selling shares to millions of ordinary investors.
Markets were poised for an announcement in the autumn, but in October O2 chief executive Mark Evans revealed it would not go ahead in 2016. He said: ‘What you have seen over the last six to eight weeks is the markets going into flux.’
He added preparations would continue, but made no commitment to a timeline, and said a float was just one of a series of options being considered.
It came after a string of companies either pulled out or slashed their offer bids ahead of an initial public offering – or sale of shares to investors.
Waste management firm Biffa cut the price of its share offering and fitness chain Pure Gym blamed market volatility after it scrapped its IPO in October. Software firm Misys pulled the plug on its flotation on similar grounds.
However, FinnCap’s Smith said confidence is returning following the abandoned floats of last year.
‘There was Misys pulled, there was Pure Gym pulled – everything was looking as if IPOs were off and everything was off,’ she said. ‘And then suddenly we had Trump getting in, and the market seemed to bounce and that’s been it ever since.’