RealTime IT News

Telefonica Moviles Prepares for IPO

[Madrid, Spain] In what would be the first listing on Spain's struggling high-tech index, Telefonica this week outlined the market debut of its mobile affiliate Telefonica Moviles.

The company plans an IPO on both U.S. and Spanish exchanges in late November and met to finalize the details on Wednesday, press reports said. By releasing between 10 and 12 percent of its capital, Telefonica Moviles hopes to bring in 900 billion pesetas (US $4.5 billion) to finance expansion and pay off its mobile Internet licenses.

The company has serious European ambitions, showing up for UMTS license auctions and contests throughout Europe. On Tuesday, the company added an Italian license to its arsenal of Spanish and German mobile Internet licenses. The German license was particularly costly, and the company has reportedly taken out a EUR 7.8 billion loan to pay for it.

The uncertain market decisions that forced other Spanish high-tech companies to pull back from scheduled IPOs have reportedly prompted Telefonica Moviles to pull back from original expectations of a 25-30 percent placement of its own capital.

"I think this is an optimal move," said Susana Garcma, an analyst at Gaesco Bolsa. "An initial placement of a given percentage--and then releasing the rest bit by bit--seems to me like the right thing to do."

Telefonica Moviles has been called "the jewel in Telefonica's crown," showing a 44% increase in profits at mid-year (compared to the same period last year) topping both rival mobile operators, Airtel and Amena. All three companies, along with the Xfera consortium, hold Spanish UMTS licenses.

The IPO means some much-needed new life for Spain's IBEX Nuevo Mercado. The high-tech, high risk index was launched on April 10, just as tech stocks were beginning to plummet. Not since the ten companies on the general index's New Technologies sector joined the NM at its inception have any new companies listed.

Telefonica Moviles would be the first to test the tech trading waters in Spain, following last minute IPO-backtracking by two companies. The software company Meta4 backed out right before its schedule market debut, as did the broadband cable company Ono (a direct Telefonica competitor trading under the name Cableuropa) last week.

Both companies cited uncertain market conditions as their motivation for delaying IPO.

Telefonica Moviles, headed by Luis Lada, was created in February to unite all of Telefonica's mobile telephony interests. Recently integrating newly acquired Latin American affiliates, the company's estimated 20 million customers make it the mobile telephony leader in Spain and in Latin America, where it operates in Chile, Argentina, Brazil, Peru, El Salvador, Guatemala and Puerto Rico.

Last month, the company added to that list with the acquisition of Motorola's Mexican affiliates.

Telefonica and Terra Networks recently joined forces to create the mobile Internet portal Terra-Mobile (www.terra-mobile.com), which offers Internet content to both to Telefonica customers and those of the competition.