Mixed Fortunes for Euro IPOs

Newly issued shares in two European incumbent operators have had differing receptions as investors size up their potential.

Ireland's national operator Eircom Ltd. (London: EIR) returned to the stock market last Friday at an initial price of €1.55, near the low end of its stated range of €1.48 to €1.75. That fell on initial trading and finished the day at €1.54. Today it has fallen again, trading at €1.48 as of 1 p.m. GMT.

Belgium's incumbent carrier Belgacom (Euronext: BELG) is faring better on its first ever day of public trading. It debuted on the Euronext Brussels exchange today at €24.50, raising €3.3 billion and valuing the operator at about €8.6 billion. The initial price was also at the low end of the range of €23 to €26.50. But, unlike Eircom, it managed an early rise and was up to €25.50 (4 percent) at 1 p.m.

While the Belgian government has retained a majority stake, the IPO sees the exit of Belgacom's three international carrier investors, TDC Tele Danmark A/S, SBC Communications Inc. (NYSE: SBC), and Singapore Telecommunications Ltd. (SingTel), which had long wanted to cash in their holdings to concentrate on their core markets (see Belgacom Announces IPO).

The initial market reactions to Eircom and Belgacom contrast with Europe's other recent service provider IPO, that of French competitive operator Iliad (Euronext: ILD), which owns broadband operator Free (see Investors Go Mad for Free Shares). Its share price soared 30 percent on its first day, rising from €16.30 to €21.25. That initial euphoria has died away, however, with the price standing at €17.80 today.

At least two more European operators, the Czech Republic's Cesky Telecom a.s. and Italy's Wind Telecomunicazioni SpA, are planning to go public in the coming year (see Italians Join the IPO Flurry and Euro Carrier IPOs Imminent).

— Ray Le Maistre, International Editor, Boardwatch

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