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3 Italia, the telecoms company owned by Hong Kong’s Hutchison Whampoa, looks unlikely to launch its long-awaited initial public offering this year as poor market sentiment continues to upset the plans of Italian companies wishing to go public.

The depressed environment for new company launches has also hit Italtel, the telecoms equipment supplier. Its listing is also on hold after the company initially wanted to start an investor roadshow in the middle of May.

It now says it is waiting for the right market conditions, a process that could take “days, weeks or months”.

3 Italia has not said anything in public on the subject of its listing for some time.

However, people close to its strategy admit that the market launch, originally intended to be the Italian market’s largest of last year, has become far less likely to happen, even by the end of the year.

Hutchison had wanted a valuation of about €12bn ($15bn) for 3 Italia and was planning to sell 20-25 per cent of the company. But it acknowledged in March that the market was probably prepared to give the company a valuation of only €9bn.

3 Italia, in common with other telecoms companies, is portraying itself more as a media company that offers products such as live television to its customers. It believes that this entitles it to a higher market valuation.

A successful performance for its live broadcasts over telephones of World Cup football matches could help sell its case.

It has already attracted advertisers such as Nike and Mercedes Benz.

Market analysts point out that Italian economic growth is likely to stay far below the average of the European Union this year; that there have been no large IPOs on the Milan exchange in 2006; and that some smaller offerings have fared badly, including that of oil company Saras.

Shares in telecoms companies worldwide have also underperformed other sectors.

Italtel, meanwhile, is aiming for a market capitalisation of €800m-€1bn after its listing but clearly feels that would be difficult.

Its three main shareholders – Cisco of the US, Telecom Italia and Clayton, Dubilier Rice, the private equity group – will be retaining control of the company, holding on to at least 50 per cent between them.

This is the second time that the company has considered an IPO. In 2004, its main shareholders failed to agree on strategy and the listing was postponed.

Wind, another large Italian mobile telecoms company, will be watching developments closely.

Naguib Sawiris, Wind’s chairman who bought control of the company from the utility Enel last year, has been talking about an IPO for the financial vehicle that controls Wind at the end of the year or the beginning of 2007.

Copyright The Financial Times Limited 2017. All rights reserved.
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