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Poland’s Play to float in Europe’s largest telecoms IPO for 5 years

Valuation of offering by country’s second-largest operator set to exceed €3.5bn, say analysts. Poland’s second-largest mobile phone company is to float on the Warsaw stock exchange, in what is expected to be Europe’s largest telecoms IPO in five years, Financial Times reports.

The initial public offering of Play Communications would be the largest since 23 per cent of Telefónica Deutschland was floated in 2012, valuing it at €6.4bn. Play’s valuation is set to surpass €3.5bn including debt, according to analysts. The smaller Finnish operator DNA floated last December and has since gained 40 per cent in value, encouraging Play to explore a float.

Play was founded a decade ago and has increased its market share, from less than 5 per cent in 2008 to 27 per cent this year, making it Poland’s second-largest mobile network. It competes with Orange, Deutsche Telekom’s T-Mobile and Polkomtel’s Plus, and has built a base of more than 14m customers.

The Polish network is controlled by a company called P4, but trades as Play. It has raised debt in Luxembourg and is controlled by Greek investor Olympia Development and Iceland’s Novator Partners. The business was refinanced in March to reduce its reliance on high-yielding bonds.

Play increased revenues by 13 per cent in 2016 to PLN6.1bn ($1.62bn), while its adjusted earnings before interest, taxation, depreciation and amortisation increased to PLN2bn from PLN1.8bn.

Jorgen Bang-Jensen, chief executive of Play, said it had pioneered a similar brand strategy in Europe to T-Mobile USA. “We have had a very consistent strategy for 10 years. A challenger talks about price, we talk about value,” he said. The mobile company also offers content bundles with Tidal for music and HBO for TV streaming.

Dhananjay Mirchandani, an analyst with Bernstein, said Play had been a “tremendous success story” and could appeal to investors looking for high-growth telecoms disrupter plays, which have included Iliad in France and Drillisch in Germany.

“As this is the largest IPO of its kind in Europe after Telefónica Deutschland’s listing in 2012, there will be interest. However, with over 25 per cent market share, Play no longer qualifies as an insurgent. And the Polish market is diabolically complex and competitive, which will put a lid on valuations,” he said.

The company is expected to raise up to €700m through the float, with the proceeds used to reduce debt and pay off high-yielding bonds. It also expects to pay a dividend of PLN650m this year and adopt a policy to pay out between 65 per cent and 75 per cent of its free cash flow in dividends from 2018.

JPMorgan, BofA Merrill Lynch and UBS are co-ordinating the IPO.

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