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VoIP Systems

Europeans Eye IPOs

After the IPO drought of the telecom downturn, vendors and service providers are again turning to the public markets for fresh funds (see Sources: Vonage Is Eyeing the Exits, Formula Completes IPO , and NeuStar Twinkles on Wall Street for examples). The latest names in Europe to consider their IPO prospects are VOIP systems vendor and cable operators Telenet and .

NetCentrex founder and CTO Olivier Hersent tells Light Reading's TV channel, LRTV, that the softswitch firm might indulge in further M&A activity following its acquisition in July of session border controller NeoTIP SA, and that an IPO would be one way to raise growth funds (see NetCentrex Acquires IMS Smarts).

Hersent recognizes that his company could also be an acquisition target. "A company like NetCentrex can either be eaten or eat," he says but adds: "We are right now more in a position to eat."

To see the full interview with Hersent, click on this link.

Telenet, which offers voice, TV, and broadband services in the northern Flanders region of Belgium, plans to go public on the Euronext exchange before the end of this year, saying it needs the funds to pay off debt and expand its operations.

The company, one of the main rivals to national operator (Euronext: BELG), hasn't provided financial details, though local media reports suggest the company is hoping to raise about €1 billion (US$1.2 billion) by floating about a third of its stock.

In 2004, Telenet generated revenues of €681 million ($827 million) and earnings before interest, tax, depreciation, and amortization (EBITDA) of €300 million ($364 million).

Swiss cable firm Cablecom also plans to float shares before the year's end, with local media estimating the potential proceeds at 5.5 billion Swiss francs ($4.3 billion), with the majority of the company's stock becoming publicly traded.

The operator is on course to generate revenues of up to CHF850 million ($666 million) and EBITDA of CHF345 million ($270 million) this year, and expects to break even in 2007 or 2008. Further details regarding the listing are not yet available.

Like Telenet, Cablecom offers a triple-play package to its customers, though broadcast TV is its most popular service, with more than 1.6 million subscribers. It also has more than 300,000 broadband users and about 150,000 voice service customers.

Its main competitor, incumbent operator (NYSE: SCM), plans to offer TV services over DSL but has had to postpone its planned 2005 launch (see Swisscom IPTV Stall Sends Shivers).

The prospects for European telecom IPOs greatly improved following the successful initial offering by French triple-play operator Iliad (Euronext: ILD), which staged a very successful IPO last year and has since gone from strength to strength (see Investors Go Mad for Free Shares and Iliad's Free Strategy Pays Off).

NetCentrex in particular will have noted the successful listing in London of two VOIP system startups, Newport Networks Ltd. (London: NNG) and Ubiquity Software Corp., in the past 18 months (see We're in the Money and Session Controller IPO Scores Success).

But while investors appear to be more receptive to telecom stocks these days, Paetec Communications Inc.'s recent experience shows that the market has retained at least some of its caution.

The profitable service provider, which generates quarterly revenues of more than $125 million by providing voice and data services to medium-sized and large businesses in 29 U.S. markets, was forced to pull its IPO plans last Friday, citing "unfavorable market conditions." Translated, that means investors weren't prepared to meet the company's price range of between $12 and $14 per share.

Paetec, which filed its registration documents with the Securities and Exchange Commission (SEC) in April, had hoped to raise north of $140 million from the sale of about 11.5 million shares. This isn't the first time Paetec, has attempted an IPO -- it canceled its first proposed listing in 2001, again citing poor market conditions.

But Paetec's experience doesn't mean there's a total lack of willing investors, as long as the price is right. Consolidated Communications Inc. (Nasdaq: CNSL) listed in July with an opening price of $13, though it had originally set a range of $14 to $16 (see Rural Carrier Makes IPO Hay). At the close of trading Friday, Consolidated's share price stood at $13.51.

— Ray Le Maistre, International News Editor, Light Reading




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LightWarrior 12/5/2012 | 3:01:18 AM
re: Europeans Eye IPOs Whether through IPO or acquisition, the investor outlook for an IMS-VoIP vendor like Netcentrex is better than for a service provider. The vendor, now thanks to IMS and FMC, can sell arms to all parties, while the SP is tied to geoagraphy and typically legacy access technology (cable, copper, etc.) and has to worry about new entrants using fiber and wireless broadband pipes. When's the IPO?
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