* Telefonica looking for 5.50-6.00 eur/shr - sources
* Order books well covered within new range - source
* Offering to raise up to 1.55 bln euros
By Alexander Hübner and Arno Schuetze
FRANKFURT, Oct 26 Telefonica SA has
narrowed the indicative price range for the listing of its
German O2-branded subsidiary, four people close to the process
In a sign that Germany's biggest initial public offering in
five years remains on track, the Spanish group has told
investors it is looking at selling shares for 5.50 to 6.00 euros
apiece, the sources said.
That compares with a 5.25 to 6.50 euro range set earlier
"The books are well covered within this (new) range," one of
the sources said.
Europe's largest telecoms company by revenue hopes to raise
around 1.5 billion euros ($1.9 billion) by selling part of its
O2-branded German subsidiary, aiming to cut its 57 billion euro
debt pile and hang on to its prized investment-grade rating.
O2 Germany - the biggest listing there since Tognum
raised 2 bln in July 2007 - joins a growing list of
European companies looking to take advantage of a more positive
climate for new stock offerings.
After months of inactivity, the European market for new
listings has shown signs of life in recent weeks, with British
insurer Direct Line and Germany's Talanx
among those whose shares have risen on stock market debuts.
Telefonica will close the order books on its offering at
1300 GMT on Monday and will then decide on the final pricing.
The shares are expected to begin trading on Oct. 30.
Based on the new range, Telefonica would raise between 1.42
and 1.55 billion euros.
NOT AT ANY PRICE
While bankers are saying there is strong investor demand for
the shares, investors are predictably looking for a good deal.
"We are very price sensitive when it comes to O2 and are
bidding at the lower end of the offering," said Andreas Mark, a
fund manager at Union Investment, adding: "You don't have to own
the stock at any price."
Neil Wilkinson at Royal London Asset Management said: "It's
reasonably small in terms of the free float (of readily
tradeable shares) and it's just not significant or material
enough for us to pay a huge amount of attention to."
In Germany, O2 is the smallest mobile operator with roughly
16.4 percent of subscribers, trailing Deutsche Telekom
, Vodafone and KPN's E-Plus. Some
analysts have said its targeted valuation was high compared with
Some investors, however, have pointed at the positive
aspects of the company.
"Germany remains the more robust consumer market in Europe
and therefore from a mobile phone point of view, probably the
more attractive market," said Gavin Launder, fund manager at
Legal & General European Trust.
As part of the transaction, Telefonica will offer 225
million shares and a "greenshoe" or overallotment option, of
33.75 million shares.
Telefonica and IPO organisers JP Morgan and UBS declined