Telefonica to Raise $1.1 Billion From Call-Center Unit IPO

May 26, 2011, 12:07 PM EDT By Manuel Baigorri and Zijing Wu

(Updates with advisers in final paragraph.)

May 26 (Bloomberg) -- Telefonica SA, Europe’s second- largest phone company, is seeking to raise about 745 million euros ($1.1 billion) in an initial public offering of its call- center division Atento Inversiones y Teleservicios SAU.

Telefonica is selling 33.7 million Atento shares, including the so-called overallotment option, for a range of 19.25 euros to 25 euros each, the Madrid-based company said today. At the middle point, Telefonica will raise 745 million euros.

Chairman and Chief Executive Officer Cesar Alierta, who had tried to sell Atento as early as in 2007, is seeking to reduce debt and focus on Latin America to offset declining domestic market share. About 56.1 percent of Atento will be publicly tradable after the IPO, according to a document obtained by Bloomberg News.

Atento’s revenue rose 26 percent last year to 1.66 billion euros, with the largest part coming from Brazil, according to Telefonica’a annual report. Operating profit before depreciation and amortization increased 23 percent to 190 million euros.

Telefonica said yesterday it plans to cut 25 percent of its Spanish workforce over five years, instead of 20 percent of over three years under an earlier proposal. The phone company is betting on Latin America’s economic growth to win back investors discouraged by Spain’s unemployment rate, the highest in Europe. While revenue from Latin America rose 26 percent, its profit margin in the region slipped 0.5 percentage point to 36.2 percent in the first quarter.

The shares fell 0.7 percent to 16.57 euros at the 5:30 p.m. close of trading in Madrid. They have gained 9.8 percent in the past 12 months, giving the company a market value of 75.6 billion euros.

Citigroup Inc. and Goldman Sachs Group Inc. are managing the IPO, along with Banco Santander SA, BNP Paribas SA, JPMorgan Chase & Co. and Banco Bilbao Vizcaya Argentaria SA.

--Editors: Kenneth Wong, Simon Thiel.

To contact the reporter on this story: Manuel Baigorri at mbaigorri@bloomberg.net; Zijing Wu in London at zwu17@bloomberg.net;

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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