Investors won't pay Canning Fok's asking price for Italy unit Hutchison Whampoa has shelved the long-awaited initial public offering of its Italian third-generation mobile phone unit, blaming weak market conditions for European telecoms stocks. Group managing director Canning Fok Kin-ning, who is also 3 Italia's chairman, said a valuation of Euro7 billion ($64.95 billion) for the IPO of 3 Italia was too low and pushing the listing through would be a disservice to shareholders. Instead, it plans to sell 10 per cent of the company via a private placement to investors willing to accept a Euro9 billion valuation. It is the second delay of the float on the Milan stock exchange after last year's failure. Although Hutchison said it now had three years to make a third attempt, the prolonged delay has cast doubt over whether investors are willing to pay top dollar for 3 Italia, of which Hutchison owns 95.4 per cent. 'It's just too early in 3 Italia's financial development ... which has no profit history. Potential investors would demand a higher discount on the company's valuation as opposed to others, as 3G and 3 Italia are still immature businesses,' a European analyst said. Mr Fok said Hutchison had been forced to shelve 3 Italia's IPO because the market was not 'educated' enough for 3G. He said its board of directors considered the Euro7 billion valuation by its bankers too low. At its first attempt last year, market sources said Hutchison was looking at a Euro12 billion to Euro15 billion enterprise value, or market capitalisation plus debt. Mr Fok said investors' views on 3 Italia had also been clouded by the recent profit warnings from European companies such as France Telecom and Vodafone. 'The market has not sufficiently understood the difference between 3 Italia and other operators ... what we should do [the next time] is to have management [present more operational details] for [potential investors],' Mr Fok said. Meanwhile, one of its joint global co-ordinators, Goldman Sachs, has agreed to underwrite a pre-IPO private placement to sell to international fund houses 10 per cent of 3 Italia for Euro420 million. Including its net debt, estimated at Euro4.8 billion, the Euro420 million sale price would value it at Euro9 billion. 'Even though we walked away from the IPO, there's still a better proposition on the table that is fairer to our shareholders,' Mr Fok said, referring to the Euro480 million private placement, which he said would not be booked into its financial accounts as an exceptional gain this year. Investors who own the 10 per cent private equity of 3 Italia have the right to exchange these shares for 3 Italia IPO shares. If it fails to list in three years, they can sell them back to Hutchison at the original investment cost plus interest. While the analyst expects the news to put pressure on Hutchison's share price tomorrow, he said suspending its offering - rather than listing it at Euro7 billion - was the lesser of two evils because investor sentiment and market conditions could change quickly, which might make 3 Italia's IPO an easier pitch to investors. At end of last year 3 Italia had 5.57 million subscribers spending an average of Euro30.60 per month.