THE INTERNATIONAL equity markets will host a new flurry of activity from Europe's leading national telecoms operators in the autumn as both France Télécom and Swisscom line up multi-billion dollar offerings.Swisscom this week announced new details of its IPO, the first major Swiss privatisation, which will be launched in mid-September. The Swiss government is looking to complete the sale of up to 49.9% of its stake in October; bankers said that the sale could value Swisscom at up to $20bn.And the French government announced its intention to further dilute its stake in France Télécom this week. The French national operator is to take a 2% cross-shareholding with Deutsche Telekom, and the government could sell a further stake of up to 10% through a secondary offering which would take its holding down to around 62%.Euroweek understands that the Trésor informed banks on Wednesday that the group would remain the same: namely Paribas and Banque Nationale de Paris as global coordinators, with Paribas as bookrunner, BNP and Merrill Lynch as joint lead managers and Deutsche Bank and Lazard as senior co-leads.Last year's Ffr42bn France Télécom privatisation was without doubt one of the best equity transactions of 1997. Pricing, widely considered cheap, led to spectacular oversubscription by investors; but the deal's success also provided a much needed boost to France's privatisation programme following the poor reception to sales in Usinor-Sacilor and Pechiney in 1996. Given the success of France Télécom's IPO, it is little suprise that the senior banks in the sale will repeat their roles in the secondary offering.The offering is likely to involve the sale of 100m to 120m shares: these should be evenly split between stock sold by the government and new shares offered by the company.The market reacted fairly savagely to news of the secondary offering, in part bankers said due to uncertainty about whether the company would have use of the proceeds from the sale. France Télécom's share price at one point fell by 8.5% before regaining 3% yesterday (Thursday) to close at Ffr398. At such levels, the secondary offering is therefore likely to match the amount raised in the IPO -- some $7bn equivalent.Swisscom used the announcement of its restated 1997 IAS financial results to outline further details of its privatisation and launch its retail marketing campaign and registration. The IPO will be a combination of a capital increase by Swisscom and the sale of secondary shares by the Swiss government.The shares are to be offered through four regional syndicates: Switzerland, North America, the UK and the rest of the world. Global coordinators on the transaction will be JP Morgan and Warburg Dillon Read.Swisscom is to seek a listing on the New York Stock Exchange, but the greatest emphasis of the marketing campaign will be on attracting the highest level of retail take-up possible. Swiss retail investors will receive preferential treatment through a priority retail offer, the first time this has been used in the Swiss market. Those who subscribe through this offer will be guaranteed a share allocation, be preferred in allocations to investors in the general retail offering, and receive a discount on the issue price.Registration for the priority offer starts on Monday, and will be backed up by a major marketing campaign in Switzerland. The provisional timetable for the privatisation envisages the offer subscription period being launched in mid-September, with pricing in the first half of October. By law, the Swiss government cannot reduce its stake below 50.1%; the amount it sells will depend on market conditions nearer the time of the offering. *
July 24, 1998
