UPDATE 2-France's Numericable to list 20-40 pct of group

Thu Sep 19, 2013 8:10am EDT

* Plans capital increase of 200-250 mln euros

* Cinven, Carlyle to reduce stakes, Altice to increase

* Sees 2-5 pct annual sales growth in 2013-16

* To consider dividend from 2015

* IPO comes amid cable boom in Europe, could trigger deals

By Leila Abboud and Gwénaëlle Barzic

PARIS, Sept 19 (Reuters) - French cable operator Numericable plans to list 20 to 40 percent of its capital in an initial public offering that could value the company at around 5 billion euros.

Numericable, which offers packages of pay-TV, Internet and fixed-line calls, laid out a plan on Thursday to increase sales 2-5 percent a year through 2016, while taking operating profit margins to 50 percent from 47.6 percent.

The listing is being carried out to allow the private-equity owners of Numericable, Cinven and Carlyle, an exit after they backed the group in 2005 and 2008 respectively.

It will also allow Numericable, hamstrung by high debt of 2.7 billion euros, to roll out fibre optic cables to gain share from telecom rivals. It now covers 9.9 million homes in France, roughly a third of households, but only 5 million are eligible for faster fibre speeds.

"The IPO will give our shareholders a window of liquidity and also gives us the means to invest more in our network to drive growth," Numericable's Chief Executive Eric Denoyer told a news conference.

The group expects to spend 220-230 million euros upgrading its network over the next three years and aims to lower its debt ratio from 4.48 times adjusted EBITDA to 3.5-4.0 through 2016.

It said it would also consider paying a dividend from 2015.

Numericable and its backers are seeking to surf a wave of investor interest in Europe's cable sector, which has enjoyed premium valuations to telecom because of its superior growth prospects. A spate of takeovers by Vodafone and Europe's biggest cable provider Liberty Global has also led investors to assign European cable companies a takeover premium.

European cable companies trade at 8.4-8.1 enterprise value to 2013-2014 EBITDA, according to Espirito Santo analysts, compared to 5.5-5.3 for incumbent telecom operators.

Numericable could be worth up to 5 billion euros based on a multiple of around 8 times its 2012 core earnings of 456 million euros, plus 181 million euros for its enterprise unit Completel.

SHAREHOLDERS

Denoyer declined to give details of the IPO's timing, though two people close to the situation said earlier this week that it could take place in early November.

There will also be a capital increase of 200-250 million euros ($267-$333.7 million) to help cut net debt, said Denoyer.

Shareholder Altice, owned by Numericable founder Patrick Drahi, plans to take up all or most of the capital hike, according to a registration document filed to the French regulator AMF. That would raise its stake "by a few percentage points" from 24 percent now, said a source close to the IPO.

Fellow shareholders Cinven and Carlyle, which now own 37.5 percent each, will reduce their stakes to provide liquidity to the IPO, the person added, declining to say by how much.

Europe has seen a pickup in new listings in 2013 as market confidence has improved. After a summer lull, several companies in September kicked off plans to go public. As of Sept. 12, $14.6 billion had been raised by European IPOs, up 198 percent on the same 2012 period, according to Thomson Reuters data.

Numericable's pending listing could also revive a mooted tie-up with Vivendi's SFR. Talks between the two last year fell apart over valuation and opposition from Vivendi's biggest shareholder Vincent Bollore. But with Vivendi studying a listing of SFR next year, the deal could resurface as markets would assign respective valuations to the assets, analysts say.

Third-place mobile operator Bouygues could also be interested in the cable operator.

"Numericable will finally have a valuation and therefore can take part in consolidation deals that require cash and equity, said one Paris-based trader, who declined to be named.

Deutsche Bank and JPMorgan are joint bookrunners for the transaction. Rothschild has an advisory role, while JPMorgan, Morgan Stanley, HSBC and Credit Agricole are expected to underwrite the listing, sources earlier said.

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