Lack of strong interest greets Nynex flotation

TOM STEVENSON

Deputy City Editor

Nynex Cablecomms, the third cable television operator to come to the market in the past year, pitched its flotation at 137p a share yesterday, towards the lower end of the projected range. The sale of 305 million shares values the company at pounds 1.3bn.

Trading in the shares officially begins next Wednesday, but on a when- issued basis, they settled at 137.5p yesterday, supported by a one-month stabilisation period during which the issue's sponsors can over-allot shares and buy them back to prevent the price falling.

Analysts said that, given the existence of the stabilisation period, the failure of the shares to rise above the flotation price indicated a lack of strong interest in the issue. One said the issue price suggested an 11 per cent rate of return over the next 10 years, which he said was low given the operational and political risks surrounding the industry.

The flotation of Nynex comes a day after Telewest, the largest UK cable company, announced plans to merge with SBC, the fifth biggest operator, in a deal worth about pounds 690m.

The move was the most significant consolidation so far for the industry, which has shrunk from 52 operators in the mid-1980s to 16 at present.

Industry observers believe consolidation will continue quickly until a handful of companies are left. Merging franchise regions offers a wealth of economies of scale and gives combined groups greater buying power for programming.

Nynex controls 16 franchise areas, 10 of which are in and around Manchester. Its regions cover 2.69 million homes.