When Telekom Austria IPO-ed simultaneously on the Vienna Stock Exchange and the NYSE in 2000, it was commonplace for European telecom firms to have dual listings. Now the only company in Austria to boast a full US listing has converted to a level one American depositary receipt (ADR) listing.
An obvious question to start with – why de-list from the NYSE?
When the SEC changed its rules in the spring, it became easier for companies to deregister because they no longer had to continue complying with US reporting obligations. Dropping SEC standards will save on unnecessary costs but it won’t mean we’re going to be any less transparent to our shareholders.
How long were you thinking about de-listing?
We had been looking at the legal framework to deregister even before the SEC changed the laws. It became quite evident a couple of years ago that the majority of our stock was traded on the Vienna Stock Exchange. Less than 1 percent was traded on the NYSE so, from a liquidity point of view, it was not necessary to be in the US in order to accept US money. Last year 24 percent of our share capital was held by US investors, yet the majority of these bought their shares on the Vienna Stock Exchange, where liquidity is high and it’s easier to buy and sell.
But wasn’t it through being listed on the NYSE that Telekom Austria became known to US investors?
I think the landscape has changed. We listed on the NYSE in 2000 when it was necessary to be listed on a US stock exchange to access the American money pool, which is by far the largest in the world.
Since then, US investors have started looking for European equity and going to the home stock exchanges, where liquidity is higher than in the US.
As a consequence, a large proportion of US liquidity can be accessed without listing in the region, so for us it doesn’t make much difference. Having a significant US shareholder base is not necessarily linked to US listing, but it is linked to being active, IR-wise, in the US.
Does this mean you will be increasing your roadshows in the US?
When we first listed in the US, we used to do roadshows there twice a year. Last year we went to the States five times and we have been there four times already this year. You just have to go and tell investors what the story is.
Would you consider having a dual listing elsewhere, like London or Hong Kong, which are more popular IPO venues because of their less stringent regulatory regimes?
For the time being we’re happy with our listing on the Vienna Stock Exchange. It’s where most of our shares are traded, and our experience is that traveling to see investors is a far better way to increase our profile and get international investors to buy stock, rather than just going for a dual listing. A dual listing only creates a new market place; it doesn’t get the customers to buy the shares. For the time being, therefore, we are fine with Vienna.
Would you consider any other destinations?
In addition to our regular trips to the US and Europe, we have begun thinking of which new markets we can access, such as Japan. It’s not about taking a two-day trip to Tokyo, though; you have to build up contact over time to allow investors to follow the equity story and see the track record.
How did your shareholders react when they found out you were going to de-list?
We spoke with US investors before we de-listed to get their thoughts on the idea, but they weren’t really bothered because most of them buy our shares on the Vienna Stock Exchange anyway. We were clear to all our shareholders that we had applied for a de-listing and explained our reasons for doing it, and they understood.
Most people are aware that an NYSE listing comes with a lot of red tape and, with just 1 percent of our shares traded there plus the cost burden associated with SOX, it was a very expensive exercise.
Would you have gone ahead even if US investors had reacted badly?
Well, we would have weighed the two options. It wasn’t the case of the SEC changing the rules and us getting out of there as fast as possible. We needed to talk to investors, we needed to think it through – and the investors, when we talked to them, were grateful we had consulted them.
And did the NYSE try to convince you to stay?
We had quite an open discussion with the exchange and it was very helpful, discussing the possibilities without bias. It realized that companies need to benefit from the stock exchange, otherwise there’s no point being listed.
