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France Telecom explores sale of EE

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France Telecom lined up banks to advise on the part flotation or sale of EE, the UK’s largest mobile operator.

The French telecoms group, which jointly owns the UK telecoms operator with Deutsche Telekom following the merger of Orange and T-Mobile in the UK in 2010, has lined up Morgan Stanley as the lead bank to oversee the process. Bank of America Merrill Lynch is also expected to be handed a lead role advising the shareholder on options for the UK group, which was previously called Everything Everywhere. Deutsche Telekom will appoint separate advisers.

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The banks will be asked to advise on a “twin track” process, according to a person familiar with the situation, to compare the outcomes of a sale or flotation of the group. No decision has been taken on whether to pursue either option. France Telecom and Deutsche Telekom declined to comment. Morgan Stanley declined to comment.

EE has been the focus of private equity interest since last summer when the FT first revealed that groups such as Apax and KKR were in talks to bid for a business that has been given an enterprise value of more than €10bn by some analysts. However, private equity groups have not been given access to confidential financial informationto evaluate bids given the lack of an official process.

France Telecom and Deutsche Telekom have also considered a partial float of EE, which is still seen by those close to the group as a likely outcome although either move would depend on investor sentiment. In November, France Telecom said that it could see a window for a flotation at the end of this year, although added that it wanted to remain a majority shareholder.

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