Olaf Swantee (pictured), EE’s chief executive, reckons a London listing would not solely be about raising cash for France Telecom and Deutsche Telekom, the UK operator’s parent companies.
Speaking to Bloomberg, he said: “The advantage of an IPO is we would be perceived as more British than we are today. Being on the stock exchange would make us more UK-centric.”
Rumours of a listing, or a sale to a private equity firm, have been circulating for some time. Swantee, however, indicated that EE may be heading for an IPO next year.
By that time, 4G competition in the UK will have heated up. More investment in networks and services will be required.
EE has enjoyed a 4G service monopoly in the UK since 30 October 2012, but that will come to an end on 29 August when Telefonica-owned O2 and Vodafone launch their own LTE services.
Since its 4G launch, EE has built up a considerable lead over rivals, racking up nearly 700,000 subscribers by the end of June. The firm says it’s on target to reach one million 4G subscribers by the end of the year.
Moreover, EE has recently rolled out “double-speed 4G” in 15 UK cities capable of theoretical peak download speeds up to 80Mb/s and with average speeds in the 24-30Mb/s range – double the operator’s LTE data speeds at launch.
EE also lowered its 4G tariffs in early July ahead of launches by O2 and Vodafone, cutting its cheapest smartphone tariff (carrying a 500MB data allowance) from £31 to £26 per month.
But times are still tough in the UK market. For the first half of 2013, EE reported a 4.9 per cent drop in service revenue, to £2.84 billion.
And France Telecom and Deutsche Telekom continue to make losses on EE. Loss attributable to equity holders of the parent company was £86 million during H1 2013 (but lower than the £101 million losses in H2 2012).
There are some encouraging signs, however. EE reports that existing customers moving to the 4G network increase spending by 10 per cent.
And H1 2013 underlying cash profits, excluding one-off items, jumped 9.1 per cent to reach £734 million. The resulting adjusted EBITDA margin, at 22.9 per cent (H1 2012: 20.3 per cent), was the best performance since the joint venture was formed in 2010.
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