Hutchison Whampoa hopes to start the spin-off of its Italian third-generation telecommunications business as early as next week with a reduced fund-raising target of up to Euro2 billion ($18.8 billion), according to a banking source. Preparation for 3 Italia's initial public offering is almost complete and the listing documents are due to be sent on January 19, with public subscription to start on January 23 and close on February 3. The stock was expected to make its trading debut on February 9 at the earliest and February 15 at the latest, pending approval from the Italian securities watchdog, sources said. A Hutchison spokeswoman declined to comment. The fund-raising target for the offering, scaled back from Euro2.5 billion, suggests a compromise by the conglomerate's management in the wrangle over 3 Italia's valuation to get the deal done as soon as possible. Hutchison was forced to abandon the original timetable for the flotation, which would have seen it launched by last month. The new target values the operation at Euro9 billion to Euro12 billion instead of Euro12 billion to Euro15 billion. The debt level has also been lowered from Euro5 billion to Euro4 billion since Hutchison converted a shareholder loan of more than Euro1 billion into equity, a move partly intended to demonstrate the parent company's confidence in 3G. 'If the high end of the valuation is set at Euro12 billion to Euro13 billion, we still have an unchanged target price for Hutchison of $95,' said an analyst with a US investment bank. CLSA projects Hutchison's fair value would increase 32 per cent to $104 per share. However, Citigroup Research, which maintained a 'sell' on Hutchison, has lowered its price target for the conglomerate from $69 to $67 as the slower than expected addition of 1.6 million 3G customers between August 24 last year and January 6 resulted in a cut in 3G valuation from $160 billion to $149 billion. Hutchison shares yesterday closed unchanged at $78.65. The first operator to offer multimedia-enabled 3G services in Italy when it launched in 2003, 3 Italia had a customer base of 4.5 million users by August last year. It will be the world's first listing of a pure play 3G operator. Goldman Sachs, Morgan Stanley, JP Morgan, Merrill Lynch and HSBC are handling the offering.
