EE's 4G success sees owners hold out for more money
EE's joint owners Orange and Deutsche Telekom have shelved plans to float the network on the stock exchange.
EE's joint owners Orange and Deutsche Telekom have shelved plans to float the network on the stock exchange, as the 4G network's success sees the company continue to grow in value.
"Deutsche Telekom and Orange have concluded the 2013 strategic asset review of EE," a spokesperson told me in a joint statement, "and are very satisfied with EE's progress and financial performance under the leadership of CEO Olaf Swantee and his management team. Following this review, the shareholders have both agreed that the best option for value creation is to maintain the current ownership structure for the time being, and they look forward to continuing their successful cooperation in the UK market."
The Financial Times reports talk of a valuation anywhere between £2.5bn and £10bn. Deutsche Telekom and Orange, both nursing debts in the multibillions, want to hang on for the higher price -- a move that's "no great surprise," industry expert Kester Mann of CCS Insight told CNET, "as EE’s value is likely to rise further given the encouraging momentum it is seeing in 4G."
"EE remains hugely focused on leading in network innovation and has been very successful in doing so," he adds. "I don’t foresee any diversion in this approach following delay of the IPO, so I wouldn’t foresee a significant impact from a customer point of view."
Kester Mann also identifies one interested party no doubt keeping a close eye on EE: US network AT&T. "We know AT&T is keen to make a move into Europe and while EE may not be its first choice, it could still present a valid target."
When Orange and T-Mobile merged in 2010 the resulting company, EE, instantly became the UK’s biggest mobile operator. EE was the first to launch a 4G service on these shores and now has 2 million customers enjoying super-fast data speeds.
Analyst Peter Boyland of IHS notes that although EE has seen its total number of customers fall at the end of last year as pay-as-you-go customers left, the number of higher-spending contract subscribers grew. EE is trousering more and more cash from data, a sign that 4G is a money-spinner that's still growing.
EE will announce its financial results on 20 February, which should give an insight into customer numbers and how much money the network is making, giving us more of an sense of whether EE has adopted the right strategy.
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