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* Public listing of approx 652 mln euros set for November
* IPO values company at up to 5.57 bln euros including debt
* Numericable surfs investor interest in EU cable
* Some say Numericable a lesser quality asset than peers
By Leila Abboud
PARIS, Oct 28 (Reuters) - French cable operator Numericableplans to sell its shares for between 20.30 euros and 24.80euros per share in a public offer next week, valuing the privateequity-owned company at up to 5.57 billion euros ($7.68 billion)including debt.
The offer is seen by executives and investors as a firststep towards a shake-up of France's telecoms sector, which hasbeen stuck in a mobile price war for nearly two years. It alsocomes at a time of increasing investor interest in Europeancable companies as all-inclusive bundles of television,Internet, mobile and fixed-line calls gain in popularity.
The sale also rewards Cinven and Carlyle for backing thegroup in 2005 and 2008 respectively and will be the largest IPOin France since 2009.
Numericable, which offers packages of pay-TV, Internet andfixed-line calls, has made a pitch to investors centred on itsgrowth prospects of a 2 to 5 percent rise in sales a year to2016 and pointed to its attractions as a takeover target forVivendi's French mobile operator SFR and its rivalBouygues.
The company said the initial public offering (IPO) wouldinclude 402 million euros worth of existing shares to be sold bycurrent owners Carlyle and Cinven. There is an overallotmentoption for additional existing shares representing up to 15percent of the offering.
The 250 million euros of new capital due to be raised in theoffer will go towards reducing its debt of 2.75 billion eurosand funding the firm's network investment programme.
A minimum 25 percent of the company is being sold, includingemployee options worth 2 million euros, the company's chiefexecutive said. Marketing is being aimed at institutionalinvestors inside and outside France, while up to 10 percent ofthe listing will be set aside for investors in France.
"We are in a growth phase and in an extremely favourableposition as high-speed broadband takes off in France," ChiefExecutive Eric Denoyer told a news conference. "Our network isahead of others in terms of speeds."
Pricing is expected to take place on Nov. 7 and trading inParis is expected to start on Nov. 8, Numericable said.
TAKEOVER HOPES
Based on Numericable's earnings before interest, tax,depreciation and amortisation last year of 590.8 million, thepost-IPO valuation ratio of enterprise value to EBITDA would bebetween 8.6 to 9.4 times. Cable sector peers are trading at anaverage of 9.5 times 2013 EBITDA, according to Espirito Santo.
That compares with a ratio of 10.4 for the STOXX 600 Europetelecoms index, a ratio of 5.27 for Deutsche Telekom and 10.14 for Vodafone.
The final valuation of France's sole cable operator willdepend largely on how much credit investors give the groupregarding a takeover, which analysts say could generate 2-3billion euros in cost savings depending on the buyer.
Numericable's owners held merger talks with Vivendi's SFRlast year but could not agree on price. SFR is now alsopreparing for an IPO next year.
Bouygues, France's third-biggest mobile operator, is theother possible buyer for Numericable since Orange, formerlyFrance Telecom, would be prevented by competition rules frombidding. Bouygues already buys wholesale broadband capacity fromNumericable.
Cable businesses are being snapped up across Europe, withtwo big deals already completed this year - Vodafone's $10 billion acquisition of Kabel Deutschland andLiberty Global's near $16 billion buy of British groupVirgin Media.
Liberty, which is Europe's largest cable group and backed byU.S. billionaire John Malone, also owns 58 percent of BelgianTelenet and 28.5 percent of Dutch Ziggo.
But Numericable is regarded as a lower quality asset thansome peers because, hamstrung by high debts, it invested less inupgrading its network in recent years, said prospectiveinstitutional investors who declined to be named.
It has now upgraded roughly 60 percent of its network, whichcovers a third of French households, to be capable of deliveringhigh-speed broadband of up to 30 megabits per second. Incontrast, Ziggo and Telenet have completed upgrades, while KabelDeutschland is roughly 95 percent done.
Bertrand Lamielle, director of investment fund B*Capital,said the valuation made sense given peers.
"Investor enthusiasm is going to be determined by how muchthey believe in the M&A angle and the possible synergies andtiming for such a scenario."
After the listing, Cinven will own about 15 percent andCarlyle 25 percent of Numericable, depending on the size of theIPO.
Their fellow owner is Altice, an investment fund controlledby entrepreneur and Numericable founder Patrick Drahi. Alticewill become the largest shareholder in Numericable after it buysshares worth an additional 6 percent from Cinven and Carlyle.
Drahi plans to increase its stake to 37.5 percent shortlyafter the IPO to get control of Numericable, a source familiarwith the matter said.
Deutsche Bank and JP Morgan are running the sale, and CreditAgricole, HSBC, and Morgan Stanley are joint bookrunners.
