O2 could be subject of management buyout

Mobile operator O2 could be the subject of a management buyout, with chief executive Ronan Dunne said to be milling the £8.5bn prospect after a planned deal with Three owner CK Hutchison fell through at the EC competition regulator stage.

The Telegraph reported late on Sunday that Dunne has been approached by a number of private equity sponsors in recent weeks, with executives at O2’s head office in Berkshire crunching the numbers to determine its feasibility.

Dunne has been at the helm of Telefonica-owned O2 for eight years, and was its chief financial officer before that.

The buyout discussions do not involve Telefonica, as that company is still under an exclusivity deal with CK Hutchison until the end of next month.

One such consortium looking to buy O2 and leverage against it with high levels of debt includes private equity firms Apax and CVC Capital Partners, and is led by former Orange UK chief Tom Alexander, the Telegraph reported.

It was also understood Sky is considering an investment in O2, but had internally ruled out a takeover.

Virgin Media owner Liberty Global was another telco to indicate a certain level of interest in O2.