Italian softswitch vendor and integrator Italtel SpA has reported a 21 percent increase in first-quarter revenues to €101 million (US$129 million) just days before it makes its debut on the Italian stock exchange in an IPO. (See Italtel Reports Q1.)

The Italian company announced its IPO plans earlier this year. It has just gained clearance for its listing and is due to join the Milan Stock Exchange in June in a process set to value the company at up to €1 billion ($1.28 billion), though an exact listing date has not been made public. (See Italtel Confirms IPO Plan and Italtel Cleared for IPO .)

Less than half of the company's stock is expected to be listed, valuing the company at between €800 million ($1 billion) and €1 billion. Reports in the Italian media suggest Italtel hopes to raise about €230 million ($294 million) from the issue of new shares, with the rest of the offering coming from existing shareholders selling parts of their holdings. Italtel is set to use much of its IPO cash to pay down its debt, which stood at €328.7 million ($420 million) on March 31.

The three main shareholders are Clayton Dubilier & Rice Inc. with 48.8 percent of the stock, Telecom Italia SpA (NYSE: TI), with 19.4 percent, and long-time partner and collaborator Cisco Systems Inc. (Nasdaq: CSCO), with 18.4 percent. (See TP Picks Italtel, Cisco for VOIP, Belgacom Picks Italtel, Cisco, and Cisco, Italtel Get Closer.)

In the three months to March 31, Italtel reported revenues of €100.9 million, up from €83.3 million a year earlier. Most of that came from Italian customers, especially Telecom Italia, with just €17.2 million of revenues coming from non-Italian customers.

The vendor also reported a first-quarter pre-tax loss of €13.1 million, though that is an improvement on the €20.7 million loss a year earlier. And Italtel notes that the first three months is traditionally its weakest quarter: Despite the loss from sub-€90 million revenues in the first quarter of 2005, the company went on to report a net profit of €13.7 million from revenues of €545.8 million for the full year. (See Italtel Reports 2005.)

With Telecom Italia as a customer and investor, and with Cisco's support, Italtel has built a strong position in the European VOIP market and has shown consistent growth during the VOIP boom. (See Dell'Oro: VOIP Gear Up and Italtel Gets the Softswitch Bronze.)

That boom is still, er, booming: According to Infonetics Research Inc. , the number of VOIP users in Europe will increase to 42.5 million by 2009, up 683 percent from the 5.4 million VOIP customers the region had in 2005.

But with intense competition in the VOIP systems market, and Italtel's installed customer base under pressure from the likes of Huawei Technologies Co. Ltd. , the Italian company is desperate to spread its wings, and might use some of its IPO proceeds to speed up its international expansion. It has developed a partnership with Accenture to help tackle the Latin American market, but is still looking for a friend to help it crack the North American market, where its close relationship with Cisco has not been extended. (See Italtel, Accenture Team Up.)

A year ago, the company said it was looking for a North American telecom equipment partner, but it had abandoned that approach by October, saying instead that it saw greater potential in systems integration relationships. (See Italtel: We Need US Partner and BB Forum: Gateway Goals for Carriers.)

— Ray Le Maistre, International News Editor, Light Reading