Outlook: One2One

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The Independent Online
IT WAS always hard to understand how anyone could think One2One, the mobile phones operator, might be worth as much as pounds 11bn, but once the number had appeared in an ABN Amro circular, it stuck and ever since the company's two owners, Cable and Wireless and MediaOne, have been insisting on not a penny less. Unfortunately, no one seems willing to pay it.

One2One has thrown open its books to all comers, and not a penny more than pounds 8bn including debt is anyone willing to pay, not in the clean cash exit both owners looking for anyway. But while pounds 11bn may be too much, pounds 8bn certainly seems too little. One2One doesn't deserve the poor brand image it has as the M25 network for London's lower classes. Its coverage is now as good as anyone's and its network is also more advanced than all others bar Orange. And while it has a higher proportion of pre-paid customers than others, its revenues per customer are as good as those of Orange.

Taking Orange's present enterprise value of pounds 13.5bn, then, Cable and Wireless's advisers are probably right to believe they can achieve a higher valuation for One2One in a stock market flotation than any of the trade buyers seem prepared to offer.

If this seems illogical, it is only because there is a mismatch between what investors seem prepared to pay for a place in these high growth businesses and what the industry itself is prepared to pay in hard cash. Still, if C & W is disappointed at the outcome of the One2One auction, the City will be positively delighted. Not since the big privatisations has there been the prospect of an pounds 8-pounds 10bn IPO.