Telefonica will consolidate its UK subsidary back into its next financial statement, indicating it no longer plans to sell the unit, following last month’s decision by the EC and stock market volatility post Brexit.

The operator said that when it publishes its results for the first half of 2016 on 28 July, its UK operations will no longer be reported as discontinued operations.

Plus, the unit’s assets and liabilities will cease to be reported as “held for sale” and will be reclassified back into full consolidation within its financial statements.

“Telefonica continues to explore different strategic alternatives for O2 UK, to be implemented when market conditions are deemed appropriate,” it said in a statement.

The EC had blocked a £10.5 billion bid from CK Hutchison in May citing “strong concerns” over the deal’s impact on UK customers, and a potential harm to “innovation in the mobile sector”.

The decision followed an in-depth investigation, which would have seen a tie-up of Telefonica’s O2 and Hutchison’s 3UK operations, creating a new market leader in the country.

Just last week it was reported that Telefonica was talking to banks about a flotation of O2 in the UK and that the Spanish company favoured a London listing and retaining a reduced stake in the business.

Telefonica was said to be in talks with private equity groups interested in buying O2 in the UK and the report said raising funds from the UK business is an important part of Telefonica’s debt reduction strategy.

A flotation was thought to be favoured by Telefonica UK CEO Ronan Dunne, who is overseeing the process for the Spanish company.  However, Telefonica was reported to have had second thoughts regarding a sale or IPO following the Brexit vote. Market volatility would have potentially damaged returns.