Italtel IPO likely to be delayed

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The initial public offering of Italtel, the Italian telecoms network company, is likely to be delayed until next month as regulators concentrate on spacing out new offerings on the market.

Italtel, which is aiming for a market capitalisation of €800m-€1bn ($1bn-$1.28bn) after the listing, would not comment on Tuesday. However people close to the listing process said the investor roadshow was now not likely to start next week as planned. Nonetheless the listing would still be likely to go ahead in the first week of June.

This is the second time that the company, which was founded in 1921, has considered an IPO. In 2004, its principal shareholders failed to agree on strategy for the company and the listing was postponed.

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

Their previous worries focused on the likelihood that Italtel could be bought by competitors and hence create difficulties for TI and Cisco, but they are now convinced that the company could stay independent, people close to the process said.

Italtel was given a valuation of about €1bn in 2000 when it was spun out from Telecom Italia. About €400m could be raised in the IPO, with about €225m coming from new shares. The money raised will be used to strengthen the balance sheet through debt reduction.

The IPO will be the latest test of the appetite for new listings in Italy. Some of the more recent large offerings such as Safilo, the eyewear company, and Marazzi, the tile group, have gone to market at the lower end of the price range given to investors.

The last large projected telecoms offering, that of Hutchison Whampoa’s 3 Italia, was delayed with no new timetable given.

Italtel has also some hard concepts to communicate to the market. Some 55 per cent of its €550m revenues last year came from business with Telecom Italia, and its strengths are in areas such as voice-over-internet-protocol (VoIP), where there is uncertainty about the pace of growth.

Nonetheless the company is much fitter than just a few years ago. It has concentrated on retaining high-margin business while quitting areas such as sales of set-top boxes and some installation work.

The fall in revenues has been accompanied by heavy staff cuts and growth in earnings.

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