Nynex flotation to go ahead

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The Independent Online

Industrial Correspondent

Nynex CableComms, the second-largest UK cable company, it to go ahead with its international offering, targeting the lion's share at investors in the UK. Nynex plans to raise between £400m and £460m, valuing the company at up to £1.4bn.

Confirmation of the flotation in London and on New York's Nasdaq follows weeks of speculation that it might be postponed because of lack of investor interest in the US. Last month General Cable was forced to drop its offer price to 190p from a target range of up to 255p, citing sentiment in the North American market. Shares in Videotron, another UK cable firm to have listed recently on Nasdaq, fell sharply after dealings in the stock began.

The value of UK cable stocks has fallen by between 10 per cent and 15 per cent since the beginning of this year. Although Nynex is cheap compared with the largest company, Telewest, some City analysts said it may be hard to sell at the target range of 131p-151p. James Dodd, an analyst with Kleinwort Benson, said: "They will have to work hard to get the price. There is still an area of potential weakness in the US and this is another approach to a well-fished pond."

Nynex CableComms, owned by Nynex Corporation of the US, said the decision to list 60 per cent of the shares in London reflected a desire to be viewed as a UK firm. The view in the City, however, is that it is to help ensure the success of the sale.

Eugene Connell, president and chief executive, said: "We believe that the offer is viewed as sensibly priced and likely to be successful. That will be positive for the sector as a whole." The sale is expected to be completed by 9 June.

Nynex plans to use the proceeds to complete the building of its cable television and telephony networks in franchises covering 2.7 million homes. The company is investing £2bn, of which just over £500m has been spent so far. A large part of the money will be absorbed by a regional cluster of 10 franchises in and around Manchester.

Nynex has more than 120,000 cable television subscribers and has installed more than 100,000 telephone lines. Its revenue last year of £41m was split between the two services. In the first quarter of this year the company installed 17,700 new telephone lines and took on 8,400 television customers. The average monthly revenue for television is £19.67, compared with £21.80 for a domestic telephone line and £53.45 for a business line.