Telefonica UK flotation of O2 gears up despite market fears

O2, one of Britain's biggest mobile phone providers, is nearing a flotation on the London Stock Exchange under the name Telefonica UK as Spanish parent company Telefonica hires advisers to oversee a potential £10bn flotation.

Barclays, UBS and Morgan Stanley are thought to be the main banks involved in the handling of the listing, which is expected to complete early in 2017 and will be the largest London initial public offer (IPO) since Glencore in 2011.

Telefonica, which is expected to appoint several brokers and other banks as second tier book-runners on the deal, has also hired public relations adviser Finsbury to work on the deal.

The debt-laden Spanish telecoms company is expected to maintain its controlling stake in O2, with the amount of the business to be sold likely to be between 25% and 49%.

Telefonica, which owns various other telecoms firms, including Giffgaff in the UK and Telefonica Deutschland in Germany, is understood to have made clear to advisers it could pull out of the listing if market conditions deteriorate, the Daily Telegraph reported, with the US election a potential concern.

Its attempt to sell O2 to Three owner CK Hutchinson was blocked by the European Commission due to fears about competition.