Mobile operator O2 could be forced to wait until next year to press ahead with a long-awaited £10 billion stock market flotation following delays to a crucial airwaves rights auction.
The firm, owned by Spanish telecoms giant Telefonica, had been awaiting the outcome of a radio spectrum sale originally set for later this year, but the auction has been knocked back into 2018 following a legal challenge from rival operators.
Telefonica is understood to have wanted the auction out of the way before triggering the initial public offering (IPO) to prevent any uncertainty dogging its potential.
While the operator made no firm commitment to float this year, it was deemed possible that an IPO could be launched if market volatility subsided and the airwaves auction went ahead as planned.
Telefonica has been eyeing a cash-raising on O2 as a means of driving down its €48.5bn debt pile.
However, the need to float the British mobile network to generate funds is now less pressing, with the Spanish group seeing its cash flow strengthen.
Telefonica revealed that it would explore a London-listing of O2 in September 2016 after seeing a tie-up with rival operator Three collapse.
The European Commission had formally blocked Hong Kong-based mobile operator CK Hutchison, which owns Three, from pushing through a £10.3 billion takeover of O2 in May last year.
Despite hopes of getting the IPO off the ground in 2016, Telefonica has paused until this year, with the airwaves auction a factor in when to push the button.
Ofcom revealed the rules for the mobile spectrum auction in July as it looked to meet the insatiable demand for data from UK smartphone users.
The telecoms regulator said the auction would support 5G mobile and increase the available airwaves for mobile devices by a third.
It plans to auction licences to use 190 MHz of spectrum in two frequency bands.
The 40 Mhz of spectrum would be auctioned in the 2.3GHz band - used for 4G and already supported by some smartphones - and 150 MHz of spectrum in the 3.4Ghz band, which is crucial for the rollout of 5G and would not be available until 2020.
However, mobile operators Three and BT's EE have made legal challenges to the process.
Three is arguing that the auction would hamper competition by allowing Vodafone, BT and O2 to claim too much of the mobile spectrum.
Ofcom wants to put in place a 37% cap, which Three wants the watchdog to curb further.
Meanwhile, EE has claimed that Three's push to reduce the cap would harm its efforts to bid in future auctions.
O2 declined to comment on the timing of the IPO.