International Corporate Finance: Value Creation with Currency Derivatives in Global Capital Markets, + Website

CASE STUDY 9.1

Jazztel's Foreign IP0

This case study accompanies Chapter 9 of International Corporate Finance.

It was early November 1999 and Antonio Carro, CEO of Jazztel, was weighing with Miguel Salis and Christoph Schmidt, respectively Jazztel's CFO and its director of strategic planning and investor relations, the prospects for the company's next round of financing. Founded only two years earlier, Jazztel's objective was to become a leading independent telecom services provider in both Spain and Portugal. To do so, the company sought to provide a full range of telecommunication and data services through its own fiber-optic network linking Spain's primary metropolitan areas. Ultimately, the company planned to extend its services to Portugal. The challenge at hand was to source the necessary capital to complete the build-out of their infrastructure. Given the newly liberalized fixed-line telecommunications market and the growing importance of the Internet, Jazztel's plans to construct a state-of-the-art network held great potential; however, just 3.5 miles of the planned 3,800-mile network were operational. A significant amount of additional capital expenditure was required, and Mr. Carro was not certain as to the risk appetite of the market.

MARKET DEREGULATION AND THE NEWLY COMPETITIVE LANDSCAPE

Following the liberalization of the Spanish telecommunications market on December 1, 1998, Jazztel became the first alternative service provider to be granted a national license ...