By Pamela Barbaglia
LONDON (Reuters) - Spain's Telefonica (MC:TEF) is looking to list about 30 percent of its British mobile unit O2 in what would be one of the biggest initial public offerings (IPOs) on the London market this year, sources told Reuters.
Europe's biggest telecom group wants to use the relative market calm after the turmoil caused by June's Brexit vote to cut its stake in Britain's second-largest mobile firm and has hired UBS (S:UBSG), Morgan Stanley (N:MS) and Barclays (L:BARC) as global coordinators for an IPO which could value O2 at about 10 billion pounds, the sources said.
An O2 spokesman referred to a Sept. 5 statement by Telefonica when it said it was considering "various strategic options" for O2, including an IPO and that "preparatory work" had begun.
Telefonica had no comment, while Barclays and Morgan Stanley declined to comment and UBS was not immediately available for comment.
Telefonica boss Jose Maria Alvarez-Pallete has asked the banks to speed up the preparatory work, hoping to list O2 in December if market conditions allow, the sources said.
They ruled out a listing in November as the deal remains in the early stages and the U.S. presidential election on Nov. 8 is seen as a potential trigger for market turmoil.
"They are hoping to list O2 at the beginning of December, but Telefonica doesn't want to take unnecessary risks if market conditions deteriorate," one of the sources said.
The deal may be delayed to the first quarter of 2017 in the event of market uncertainty.
TAKEOVER BID?
Telefonica has been reviewing strategic options for O2 since a 10.3 billion pound sale to CK Hutchison Holdings (HK:0001) was blocked by Europe's antitrust watchdog in May.
On Sept. 5, chairman Alvarez-Pallete said the company was close to taking a decision on either a partial sale or a listing which was to take place before early 2017.
Telefonica has decided to retain control of O2 rather than sell it all, despite its efforts to cut down its 50 billion euros of debt, the sources said.
O2, which has more than 25 million customers, has long been on the radar screen of private equity funds, but their ambitions were stymied by Britain's vote to leave the EU.
A minority stake listing would still leave the door open for Liberty Global (O:LBTYA) or another player to launch a takeover bid, another source said, adding that Liberty's John Malone has yet to decide on his next move in Britain.
European listings have recently picked up after a slowdown in capital market deals, mainly due to jitters over Brexit.
On Sept. 23 Danish card payment services company Nets
British fitness club chain Pure Gym
And Telefonica is also in the process of floating a minority stake of at least 25 percent in its telecoms masts business Telxius