Jun 27, 2017

Telefónica commits to UK as spectrum auction looms

José María Álvarez-Pallete, chairman and chief executive of Telefónica, said that a much-delayed spectrum auction in the UK provided the company with an opportunity to strengthen its position, more than a year after regulators blocked the £10.5bn sale of O2 to its rival Three as its owner tried to slash its debt burden. "We are building all the blocks to make sure that we even improve our competitive position in the UK. We are ready to participate actively In in the spectrum auction. As we speak, the company is preparing for an IPO, so we have a full agenda in the UK," said Mr Álvarez-Pallete. Ofcom is expected to set out the terms of the delayed spectrum auction in July, before kicking off a sale later in the year. The success of O2 in acquiring more airwaves will be critical to how Telefónica proceeds with a planned float of a minority stake in the UK business. Carlos Winzer, a telecoms analyst with Moody's which cut its rating on Telefónica last year, said that a recovery in Spanish revenue is "Fundamental" to the company's prospects, given it cannot rely on a float of O2. "It is very challenging to IPO O2 plc in this environment due to uncertainty related to Brexit and the spectrum auction. Mr Álvarez-Pallete has some big stepping stones to overcome but he has a very clear strategy in mind. He is a marathon runner so we have to be patient."

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