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Belgacom IPO will generate €4bn windfall

Telco's market value to rise to €11bn

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Analysts expect Belgian telco Belgacom's forthcoming flotation to give the company a market value of &euro11bn, and raise more than €4bn. The sale of the state-controlled former monopoly - agreed by shareholders last October - should prove an attractive opportunity for investors seeking a strong dividend provider.

Belgacom is due to start trading on the Brussels Euronext exchange on 22 March, in what will be one of the biggest initial public offerings in Europe in recent years. A price range for the Belgacom shares will be published on 8 March, and a final price will be announced when trading begins. At least 15 per cent of the shares will be offered to retail investors in Belgium.

The carrier will be selling the entire 46.9 per cent owned by a consortium made up of SBC Communications, Singapore's SingTel and Denmark's TDC. The three telecoms operators have been shareholders in Belgacom since 1995, when they paid $2.46 billion to take a share of the privatised state monopoly.

Indeed, the sale will provide some welcome cash for SBC Communications, which earlier this week announced it was selling between 500,000 and 650,000 local telephone access lines to help its mobile phone joint venture - Cingular Wireless - to pay the heavy $41bn cash price for AT&T Wireless Services.

The Belgian government owns 50 per cent plus one share of Belgacom, and intends to keep its controlling stake. Belgacom itself owns the remaining 3.1 per cent, and it will buy back €1 million worth of shares at issue price before the IPO.

Belgacom never took part in the spending and acquisition spree like many of its European rivals, and avoided the high fees for third generation mobile phone licenses (Belgium held 3G auctions for the licenses after the boom period). Consequently, it gained a bit of a reputation as a slow-moving operator. However, the company has one of strongest balance sheets of any European telco, with only €482m of debt. It is likely to prove attractive to investors looking for a dividend provider. Last month, it revealed plans to pay €395m in dividends for 2003.

Source: ComputerWire/Datamonitor

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