Orange to Revisit Potential IPO of U.K. Unit EE After Summer

Orange SA and Deutsche Telekom AG, the co-owners of British mobile-phone company EE, will reevaluate options for the venture after summer and may revive plans for an initial public offering, the French partner’s finance chief said.

While an IPO is still the preferred option for EE, other scenarios will be examined depending on rivals’ strategies in the U.K., Gervais Pellissier said yesterday. If U.K. carriers begin selling Internet, TV and voice services in a package, EE may need to do the same, which could change the company’s outlook for an IPO, he said. Pellissier will move to head Orange’s European businesses including the British market on Sept. 1.

Olaf Swantee, EE’s chief, has been asked to “position EE either on dividend or return or growth,” within the next six months, Pellissier told reporters in Paris. “We will decide when we return from vacation.”

Orange and Deutsche Telekom in January called off a plan to sell shares in their 50-50 U.K. wireless venture. Leading up to the decision, a strategic review of the unit had included options such as the sale of a minority stake.

Orange fell 0.3 percent to 11.91 euros at 9:23 a.m. in Paris trading. Deutsche Telekom rose 0.3 percent to 12.45 euros in Frankfurt.

Shareholders elected Stephane Richard last month for another term as chief executive officer of Orange. As he looks to stop phone bills from falling further in Europe, Richard is exploring a potential combination with Bouygues SA’s telecommunications unit in France, people familiar with the matter have said.

Strategic Direction

The company is planning to announce a new strategic direction by the end of the year after French price wars and a weak European economy lead to a 9.9 percent drop in revenue since 2010. Orange, the biggest French phone company, is considering merging with another operator.

The French government, which owns 27 percent of Orange, wants deals too. France’s economy minister Arnaud Montebourg has repeatedly called on phone operators in the country to consolidate down to three to improve the competitive dynamics of the market.

Orange and Bouygues have held preliminary discussions which would combine France’s biggest and third-largest phone companies, people familiar with the matter have said, asking not to be named discussing confidential topics. Iliad -- one of the primary drivers of France’s price war after its Free brand introduced 2-euro-a-month phone plans two years ago -- also has an eye on Bouygues mobile phone operations, other people with knowledge of the companies’ thinking have said.

Still, Pellisier said that European regulators and carriers may be at odds when it comes to consolidation, particularly the idea of “market repair” from having fewer competitors after a deal.

“Market repair is a four letter word for antitrust. It’s not good. Market repair is good for investors,” he said.

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