Spanish telecom company Telefonica S.A. (TEF, TDE.L), which is burdened by hefty debt, on Tuesday announced that it will raise as much as 1.68 billion euros from the initial public offering of its German unit.
In the planned IPO of Telefonica Deutschland Holding AG, the telecom operator will sell 225 million shares in a price band of 5.25 euros to 6.50 euros per share. The potential over allotments, called greenshoe option, will be of up to 33.75 million registered shares. At the mid-point of the price range, the offer corresponds to a placement volume of 1.52 billion euros assuming full exercise of the greenshoe option.
According to the company, the targeted free float following the IPO, upon placement of the shares offered, including full exercise of the greenshoe option, is approximately up to 23.17 percent. Telefónica will remain the majority shareholder with approximately 76.83 percent of the German unit, assuming full exercise of the greenshoe option.
The offer period commences on October 17 and is scheduled to end on October 29. The shares will be listed on the Frankfurt Stock Exchange on October 30.
René Schuster, CEO of Telefónica Deutschland said, "Our strong revenue growth over recent years as well as our internal efficiency enhancement initiatives has enabled us to increase cash flow which we will use to drive further growth and deliver attractive shareholder returns."
It was on October 3rd that Telefonica said it is preparing for an IPO of its German unit, as it aims to strengthen portfolio and drive growth amid high demand for mobile data services.
The unit is the third largest telecommunications provider in Germany in terms of fiscal 2011 revenues of 5 billion euros. The steady growth has continued in the first half of 2012, achieving a turnover of 2.6 billion euros, 5 percent higher than last year. As of June 30, the company had more than 25 million customer connections.
Schuster now added, "Our Wireless Service Revenues will continue to increase, although at a lower rate than in the previous quarters, on the back of a particularly strong result in the three months ended September 30, 2011. We expect OIBDA to deliver strong growth in line with previous quarters."
In the IPO, J.P. Morgan and UBS Investment Bank are the joint global coordinators and joint bookrunners.
In order to ease its debt of 58 billion euros, Telefonica last week agreed to sell its Customer Relationship Management or CRM business Atento to private equity firm Bain Capital Partners LLC for 1.04 billion euros. Telefonica also disposed a $1.4 billion stake in China Unicom (Hong Kong) Ltd, and is said to be in talks with potential buyers for some of its assets.
In Madrid, Telefonica shares are currently trading at 10.29 euros, up 0.12 euros or 1.18 percent. In London, the shares are at 10.12 pence, down 0.39 percent.
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