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.

News Around the Web