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* Plans capital increase of 200-250 mln euros
* Cinven, Carlyle to reduce stakes, Altice to increase
* Sees 2-5 pct annual sales growth in 2013-16
* To consider dividend from 2015
* IPO comes amid cable boom in Europe, could trigger deals
By Leila Abboud and Gwénaëlle Barzic
PARIS, Sept 19 (Reuters) - French cable operator Numericableplans to list 20 to 40 percent of its capital in an initialpublic offering that could value the company at around 5 billioneuros.
Numericable, which offers packages of pay-TV, Internet andfixed-line calls, laid out a plan on Thursday to increase sales2-5 percent a year through 2016, while taking operating profitmargins to 50 percent from 47.6 percent.
The listing is being carried out to allow the private-equityowners of Numericable, Cinven and Carlyle, an exit after theybacked the group in 2005 and 2008 respectively.
It will also allow Numericable, hamstrung by high debt of2.7 billion euros, to roll out fibre optic cables to gain sharefrom telecom rivals. It now covers 9.9 million homes in France,roughly a third of households, but only 5 million are eligiblefor faster fibre speeds.
"The IPO will give our shareholders a window of liquidityand also gives us the means to invest more in our network todrive growth," Numericable's Chief Executive Eric Denoyer told anews conference.
The group expects to spend 220-230 million euros upgradingits network over the next three years and aims to lower its debtratio from 4.48 times adjusted EBITDA to 3.5-4.0 through 2016.
It said it would also consider paying a dividend from 2015.
Numericable and its backers are seeking to surf a wave ofinvestor interest in Europe's cable sector, which has enjoyedpremium valuations to telecom because of its superior growthprospects. A spate of takeovers by Vodafone and Europe'sbiggest cable provider Liberty Global has also ledinvestors to assign European cable companies a takeover premium.
European cable companies trade at 8.4-8.1 enterprise valueto 2013-2014 EBITDA, according to Espirito Santo analysts,compared to 5.5-5.3 for incumbent telecom operators.
Numericable could be worth up to 5 billion euros based on amultiple of around 8 times its 2012 core earnings of 456 millioneuros, plus 181 million euros for its enterprise unit Completel.
SHAREHOLDERS
Denoyer declined to give details of the IPO's timing, thoughtwo people close to the situation said earlier this week that itcould take place in early November.
There will also be a capital increase of 200-250 millioneuros ($267-$333.7 million) to help cut net debt, said Denoyer.
Shareholder Altice, owned by Numericable founder PatrickDrahi, plans to take up all or most of the capital hike,according to a registration document filed to the Frenchregulator AMF. That would raise its stake "by a few percentagepoints" from 24 percent now, said a source close to the IPO.
Fellow shareholders Cinven and Carlyle, which now own 37.5percent each, will reduce their stakes to provide liquidity tothe IPO, the person added, declining to say by how much.
Europe has seen a pickup in new listings in 2013 as marketconfidence has improved. After a summer lull, several companiesin September kicked off plans to go public. As of Sept. 12,$14.6 billion had been raised by European IPOs, up 198 percenton the same 2012 period, according to Thomson Reuters data.
Numericable's pending listing could also revive a mootedtie-up with Vivendi's SFR. Talks between the two last year fellapart over valuation and opposition from Vivendi's biggestshareholder Vincent Bollore. But with Vivendi studying a listingof SFR next year, the deal could resurface as markets wouldassign respective valuations to the assets, analysts say.
Third-place mobile operator Bouygues could also beinterested in the cable operator.
"Numericable will finally have a valuation and therefore cantake part in consolidation deals that require cash and equity,said one Paris-based trader, who declined to be named.
Deutsche Bank and JPMorgan are joint bookrunners for thetransaction. Rothschild has an advisory role, while JPMorgan,Morgan Stanley, HSBC and Credit Agricole are expected tounderwrite the listing, sources earlier said.
