MILAN (WiMAX Day). The Italian telecommunications company Retelit SpA recently announced a € 50 million EUR capital increase for the build-out of its WiMAX network. In February 2008, Retelit subsidiary e-Via SpA was awarded licenses for WiMAX spectrum in the northern and central regions of Italy. The company paid € 23.3 million EUR for the licenses.

Retelit, which is listed on the Main Market of the the Milan Stock Exchange (MTA), announced that the capital increase will be achieved through a rights issue of € 31.5 million EUR and warrants of € 18.8 million EUR.  The majority of the rights issue is underwritten by Centrobanca SpA, and current Retilit shareholders Selin SpA, Sirti SpA, HBC SpA and Sviluppo Italia SpA.

While many of Europe’s leading banks and investment funds have capitalised European WiMAX networks over the last year through private investments, Retelit is one of the first companies to go directly to the public markets for capital aimed specifically for WiMAX. According to Jana Navloski, European Equities analyst at Bank of America, “investors have been very receptive to this, and we expect it will be over-subscribed.”

At least half of the proceeds from the rights issue will re-pay a bridge loan that was used to acquire the licenses at auction in February. The remainder will be used for infrastructure capex.

What interests investors is that Retelit has an impressive track record, said Navloski, having build one of the largest wholesale fibre networks in Italy, and “a compelling WiMAX business plan.”

Retelit says its WiMAX business will “offer fixed and nomadic solutions drawn for residential and SOHO market. It will cover urban areas with less than 15,000 inhabitants.” One key strategy for WiMAX for Retelit will be to leverage its current wholesale business model, where it offers services to companies such as Orange, BT, and FastWeb, as well as many government offices, local ISPs, and municipalities.

One principal beneficiary of WiMAX services from Retelit is expected to be the US Defense Information System Agency (DISA). Retelit was awarded a contract from DISA last year to provide high-speed broadband services to the US Army, Navy and Air Force at strategic sites in Italy and the Mediterranean.

The result of its investment in WiMAX is expected to add revenue growth in excess of twenty percent over the next five years, said Retelit, with a contribution to EBITDA growth of over thirty-five percent.