Iceland sets Landssimi Islands privatization schedule

HELSINKI, Finland—The government of Iceland has set out a timetable for its sale of a 49-percent equity stake in state-run telecoms group Landssimi Islands, in an offering that values the company at more than US$700 million. The move represents the largest privatization in Iceland’s history.
Under the government’s partial-privatization plan, the state will list 3.46 billion shares on the market in a three-phase operation starting on 19 September, when 14 percent of the company will be floated in an initial public offering.
The government also proposes to place 25 percent of shares in Landssimi Islands with a single industrial investor in December, although it has hinted the core investor could extend its holding to 35 percent through a further private placement. Nordic telecom companies Telia and Sonera have expressed an interest in participating in the semi-privatization.
This leaves a 10-percent tranche to be sold to global institutional investors in posts of 2 percent or 3 percent at an as-yet unspecified date. The government is hoping to raise US$350 million from the 49-percent initial public offering (IPO).
“While the share price has not been set it, it is likely to be priced moderately given that the local market is small and not so liquid,” said Arnar Freyr Olafsson, chief analyst with the Landsbref investment bank in Reykjavik.
The IPO will make Landssimi Islands the biggest listed company on the Reykjavik Stock Exchange, ahead of Bank Islandsbanki, which currently has a capitalization of US$400 million.
Landssimi is one of the largest companies in Iceland with about 1,500 employees. Founded in 1905, it acquired its existing shape in 1998 when the state-run post and telecom group Postur & Simi was split into two units, Landssimi and the post administration Islandspostur. Landssimi holds a 75-percent share of the mobile and 95 percent of the fixed-line markets in Iceland. Landssimi generated revenues of US$175 million in 2000, up 17.7 percent on the previous year.
Competitor Islandssimi holds 25 percent of the mobile and 5 percent of the fixed-line market share.