France’s Numericable Set For IPO

Gallic cable player subject of takeover speculation

MADRID  – After Vodafone’s $10 billion takeover of Germany’s Kabel Deutschland and Liberty Global’s $16 billion acquisition of the U.K.’s Virgin Media, France’s Numericable is looking to cash in – literally – on the craze for European cable.

France’s biggest cable TV operator, offering bundled quad-play – TV, Internet, fixed and cell telephony – to clients, Numericable has begun to launch an Initial Public Offering, the biggest on the Paris Bourse since 2009, seeking to sell a minimum 25% of its shares.

Pricing – which will see Numericable shares sell at Euros20.3-Euros24.8 ($28.0 – $34.2), valuing Numericable at up to $7.7 billion, will take place Nov. 7. Trading is skedded for a day later.

With the stock market listing, Numericable aims to raise around Euros652 million ($906 million). It may well achieve that goal: Reuters reported Tuesday, citing two sources close to the deal, that the public listing was already totally subscribed.

The big question, however, is whether Numericable is making hay while the sun still shines.

While the biggest cable player in France, Numericable still pales before larger Gallic telco broadband players: France Telecom-Orange, Free and Vivendi’s SFR.

Slumping from 2008’s 1.55 million, Numericable’s retail sub base finally picked up last quarter 2012, thanks to the introduction of a new “La Box” router and TV set-top box and a tail-off in analogue customer churn.

Numericable has said it will use IPO proceeds to pay off part of onerous debt of $3.8 billion and to complete the upgrade of its fibre-to-the-building (FTTB) and DOCSIS 3.0 high-speed network.

For its IPO, Numericable has not made extravagant promises to investors: a 2%-5% per-year sales growth through to 2016; finalization of its network upgrade; an addition of 200,000-250,000 subs.

But it looks set for bigger competition in the future. Currently, its French rivals, that are also upgrading, have access to only about 20% of Numericable’s footprint, which covers about a third of French households, said one analyst. That figure will rise in three years time to about 60%.

“The problem is Numericable is a much smaller company than Virgin Media and Kabel Deutschland, it hasn’t had the resources to leverage its better network and to invest in TV content and is in a much less favorable position for growth in the future,” the analyst added.

He pointed to the fact that Numericable currently doesn’t have the money to offer dominant French broadcaster TF1’s catch-up TV service.

Even with an IPO, Numericable’s lure predicates some kind of merger that would allow its partner to fully exploit Europe’s gathering appetite for four-play offers.

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