Belgacom is a MRV customer:
www.mrv.com/library/ download.php?ctl=MRV-NWSLTR-EUROPE_2003_1&type=pdf72_url
from WSJ:
Belgacom IPO to Test Appetite
Of Market for Telecom Stocks
By DAVID PRINGLE and ANITA RAGHAVAN
Staff Reporters of THE WALL STREET JOURNAL
In a pivotal test of the market for telecommunications stocks, Belgacom SA, Belgium's state-controlled telephone company, plans to sell shares to investors early next year, marking the first major offering of a European telecommunications company in nearly three years.
The proposed initial public offering of about a 35% stake, valued at as much as €3.5 billion ($4.1 billion), would mark the first important reading on investors' appetite for new telecommunications shares in Europe since France Telecom SA sold a minority stake in its mobile-phone subsidiary Orange for $5.76 billion (€4.92 billion) in February 2001. As part of the offering plans, a consortium of investors, including SBC Communications Inc., of the U.S., TDC AS of Denmark and Singapore Telecommunications Ltd. will sell their stakes.
Ever since the technology and telecommunications stock bubble burst in March 2000, the window for new telecommunications offerings has been slammed shut. In the U.S., for instance, there hasn't been one major telecom IPO since AT&T Corp. took AT&T Wireless Services Inc. public in April 2000. And, globally, telecommunications IPOs have dwindled to $632.8 million this year compared with $48.9 billion in 2000.
In Europe, telecommunications shares that have been sold to the public since the bust have performed poorly. That has made investors wary of putting more money into debt-laden telephone companies. So far this year, there have been only $5.8 million in telecom IPOs in Europe compared with $21.5 billion three years ago, according to Thomson Financial.
"If the offering is successful and the shares perform well, it could give both companies and investors confidence about how they view the equity market," says Scott Mead, who until recently was the chairman of Goldman's global telecommunications, media and technology group.
A successful sale could spur other players to shed their stakes in telecommunications companies. Roughly €90 billion of stock in European telecommunications companies is owned by governments or companies seeking to sell, says Christopher Wood, an analyst with J.P. Morgan in London.
But even though telecommunications companies are generating billions of euros in cash after brutal cost-cutting, Mr. Wood isn't convinced that investors will scramble to snap up shares in new listings such as Belgacom. "A lot of people want to be in cyclical [stocks] and telecoms are increasingly seen as defensive," he says.
Exiting Belgacom comes at an opportune time for SBC, which like its U.S. peers is slashing debt. SBC, which owns a 17.5% stake in the Belgian carrier, has been looking to sell its European portfolio for some time and focus on its core U.S. business, which is facing stiff competition from cable companies.
SBC, of San Antonio, Texas, could receive €1.75 billion for its stake if Belgacom is valued at as much as €10 billion, as some analysts expect. SBC still owns a 41.6% stake in TDC, making it the Danish telephone operator's largest shareholder. Two years ago, SBC, as part of its effort to pare its European investments, had separate talks with Sweden's Telia AB and Norway's Telenor ASA about selling the stake, but SBC couldn't reach an agreement with either party.
Besides SBC, Denmark's TDC itself has a 16.5% stake in Belgacom, and Singapore Telecommunications has a 12.15% stake. The Belgian government, which owns a 50% stake plus one share in Belgacom, plans to maintain control of the company, the last remaining unlisted national telephone company in Western Europe.
If the offering is successful, other European governments, which are also looking to shed assets to replenish their coffers after several years of sluggish economic growth, could follow with similar sales. "Every time there is demand, you will get governments and companies selling into it," says J.P. Morgan's Mr. Wood. The Dutch government recently sold a 12% stake in telephone company KPN NV to U.S. bank Citigroup Inc. for an undisclosed sum.
In an effort not to overburden the still-fragile IPO market, the Belgacom IPO will be uniquely structured. As part of a deal with the Belgian government, the consortium of minority investors is expected to exercise an option to sell to Belgacom €1.325 billion of shares in two parts, one ahead of the initial offering and one at the time of it, say people familiar with the situation.
Although the consortium is hoping the IPO will take place in the first quarter of next year, the exact timing will depend on market conditions, according to people familiar with the situation. The deal struck between the Belgian government and the minority shareholders has a provision for the offering to take place any time up to July 2005, these people said.
As part of the deal, the Belgian government also has agreed to take on Belgacom's pension fund and future pension-fund liabilities, in return for a €1.4 billion cash payment from the telephone company.
Even after Belgacom has paid this sum and bought back its own shares, it will still be one of Europe's least-indebted telecommunications companies because it didn't spend heavily on acquisitions and operating licenses in the boom years. Belgacom, which reported a net profit of €991 million on revenue of €5.22 billion in 2002, also has been cutting costs. At the end of 2002, it had 19,000 employees compared with 22,300 at the end of 2001. However, its base of fixed-line subscribers has been shrinking in recent years, while growth in its Belgacom Mobile cellphone business, which is 25% owned by Vodafone Group PLC, is slowing.
Lehman Brothers Holdings Inc. and Goldman Sachs Group Inc. are acting as advisers to the consortium of minority shareholders in Belgacom, while Morgan Stanley is acting as adviser to the Belgian government. |
