Britain's biggest mobile operator Everything Everywhere on Tuesday refused to rule out the possibility that joint owner Deutsche Telekom AG could exit the business, as bankers suggested the German group could float part or all of its holding.
Chief Executive Olaf Swantee said talk that Deutsche could sell out of the 50:50 partnership with France Telecom was rumour and speculation, and that any inquiries should be directed to the German company itself.
Swantee's comments on the growing speculation came as Everything Everwhere posted 2011 results that showed signs of good momentum less than two years after the formation of the firm.
Deutsche Telekom has always been seen as the most likely partner to exit the joint venture after the French firm took over the main management roles in a reshuffle last year, and as it struggled in other markets such as the United States.
One analyst who asked not to be named said Deutsche had recently considered an IPO for either part or all of its stake in the joint venture but had pulled the move due to market conditions and other factors. The analyst said the business is still expected to come back to market sometime this year however.
I can't really comment on that, Swantee said, of the firm that runs the Orange and T-Mobile brands In Britain.
A banker that advises European telecom companies said that if Deutsche wanted to exit Britain, an IPO was the most likely route.
I don't see that until the second half of this year or next year at the earliest, but DT is looking at all its assets with a view to what to exit, the banker said.
The banker thought it unlikely that France Telecom would buy out Deutsche's stake.
Another banker in the sector felt that an imminent exit was too early, but he noted that joint ventures rarely last forever.
A third said France Telecom was not a buyer because it had its own capital constraints and could have to do something with its own dividend soon.
Deutsche has been jolted into considering its options after failing in the United States to sell itself to AT&T.
With regulators unlikely to allow further consolidation amongst the major players in the British market, trade interest could be reduced.
Everything Everwhere saw solid revenue growth last year as it lured yet more customers from cheaper pay-as-you-go offerings onto more valuable long-term contracts through the sale of smartphones and data packages with internet access.
It also showed further progress in removing costs from the business to boost core earnings margins, and said it was on track for its synergy targets.
In total, service revenue growth for the provision of ongoing services was up 2.1 percent when excluding the impact of regulatory changes. Including the impact of regulation, it was down 2.1 percent.
Analysts at Espirito Santo noted that this was a small improvement but said it was slightly Vodafone, the only other major telecom firm to have reported results.
The unlisted joint venture said much of the growth came from the move to more expensive smartphones with data packages which enable customers to access the internet while on the go.
Underlying service revenue growth was driven by a 7.5 percent year-on-year increase in the contract customer base, and it had its strongest quarter of new contract customers ever in the fourth quarter, with a record 313,000 net additions.
In Everything Everywhere there is real momentum, Swantee said. As a result of network sharing and customer experience improvements, we are seeing good commercial momentum and are capitalising on the smartphone and data opportunity to drive underlying growth.
(Editing by Hans-Juergen Peters)