* Spain's main cable operator eyes early 2014 IPO - sources
* Profit falling, but optic fibre asset lures investors
* Move could trigger wave of deals in Spanish telco sector
By Julien Toyer
MADRID, Dec 10 Spain's main cable operator Ono
is considering an initial public offering for some of its shares
in the first half of 2014, two sources with knowledge of the
matter said, a move which could speed up consolidation in the
pressured Spanish telecom sector.
While the sources noted that no final decision had yet been
made on whether to partially list the company, they said Ono's
management was keen to take advantage of renewed interest in
Spanish assets from foreign investors and of a slight uptick in
the country's economic performance to move ahead with the plan.
If confirmed, it would be the second initial public offering
(IPO) of a European cable firm in a few months, after France's
Numericable last month raised 652.2 million euros ($895 million)
to help cut debt and upgrade its network.
"They've seen the strong demand for Numericable shares in
France and they want to push on with the listing," said one of
the sources on condition of anonymity.
Business daily Expansion said on Tuesday the plan could take
the form of a share offering coupled with a capital increase and
that both moves would likely be discussed at Ono's next board
meeting, due in the next few weeks.
Ono, which has repeatedly said in the past that going public
was a possibility, declined to comment.
The cable operator posted a 15-million-euro loss in the nine
months to September and its TV business is losing clients as
cash-strapped Spaniards cut leisure spending, but its optic
fibre network could be an asset for telecom operators eager to
sell high-margin data services.
The sources said Ono, once partially listed, would likely be
a takeover target for bigger competitors Vodafone and
Orange, which are trying to capture a larger share of
the Spanish market to make headway against former monopoly
"A listing would put a price on the asset and make it a
palatable target for the likes of Vodafone or Orange, whose
margins have been seriously pressured by the ongoing war on
prices," said the source.
Most Spanish telecom operators have been offering cheaper
deals over the past few months in a bid to retain clients.
The trend was triggered after Telefonica last year launched
a so-called quadruple-play offer which bundles fixed and mobile
phone contracts with internet and TV services and is sold at a
cheaper price than each service individually.
Analysts believe the price war is laying the ground for
market consolidation with smaller players Ono, Jazztel
and Yoigo, owned by Teliasonera. in the spotlight.
"Vodafone's urgent need to compete more with Telefonica's
proactive quadruple-play offer means cable operator Ono and
Jazztel could be potential targets," said Deutsche Bank in a
note released to clients on Tuesday.
The second source also said that Orange had been looking at
ways to boost its Spanish business although any specific move
would have to wait until next year and a possible change in the
management of the French company.
Ono could benefit from a comparatively cheaper valuation
than Jazztel, whose shares have risen more than 44
percent this year.
But it also needs to address falling profits and high debt
to lure investors. Ono's debt, at 4.65 times its earnings before
interest, taxes, depreciation and amortization is high in
comparison with peers.
"In order to move ahead, they need one or two quarters of
good earnings and profit, a less competitive environment and
Spanish good macroeconomic data," said the second source.
Consumer spending has showed recent signs of stabilising and
Spanish authorities expect the economy to grow between 0.2
percent to 0.3 percent in the last quarter of the year and to
expand by at least 0.7 percent in 2014.