Telefonica ditches plans to sell O2 UK

Telefonica has shelved plans to sell a stake in O2 UK, its UK subsidiary.

The Spanish telecoms group said on Wednesday that, following the European Commission decision to block the sale of O2 UK to Hutchison Whampoa Group, the unit will no longer be reported as discontinued operations. The assets and liabilities of the business will cease to be reported as ?held for sale?, and it will be fully consolidated within the group in its half-year results, which are due to be published in late July.

Since the European Commission ruled against the planned sale of O2 to CK Hutchison, the owner of Three, there has been speculation about the future of the business. There was talk of a sale to a private equity firm, a management buyout, or an initial public offering.

According to a report by Bloomberg, the UK?s decision to leave the European Union ?created a final, insurmountable hurdle to a 15-month sales effort aimed at cutting debt?.

?Telefonica continues to explore different strategic alternatives for O2 UK, to be implemented when market conditions are deemed appropriate,? the company said in a statement to the Spanish National Securities Market Commission (CNMV).

The result of last week?s referendum has also caused rival operator Vodafone to rethink its strategy.

Vodafone, one of the biggest companies in the UK, revealed that it was considering relocating its London headquarters in light of the decision.

In a statement, Vodafone emphasized the importance of the single legal framework across the European Union, as well as freedom of movement, capital and goods, all of which are ?integral to the operation of any pan-European business?.

The company added: ?It remains unclear at this point how many of those positive attributes will remain in place once the process of the UK?s exit from the European Union has been completed.?

Vodafone also said, however, that it was too early to ?draw any firm conclusions regarding the long-term location for the headquarters?, the BBC reported.