Ufone’s merger likely to be the next best thing
Lahore, 17th September: Pakistan’s biggest telecom company Ufone’s merger/acquisition is likely to be the next best thing in the telecom industry.
According to reports from MLN, Pakistan Telecom industry is prepping itself for another merger/acquisition, with Pakistan Telecom Company (PTC) as the bidder and Ufone being the target company.
According to research carried out by Topline Securities, PTC recently issued a Request for Proposal (RFP) to various financial institutions to submit proposals for an advisory role for a possible amalgamation/merger with other telecom operators.
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Topline suggested that if and when Ufone is taken over by PTC, its EV/Sales might stand at ~2.5x which translates into an enterprise value of Rs. 152 billion (close to the US $1 billion).
The net value of the company, after taking into account the liabilities, will amount to around Rs. 76 billion i.e. Rs. 15/share for PTC. This is a lot higher in comparison to the Sum of total parts (SOTP) of PTC, which stands at nearly Rs 29, a discount of 63% to the current market price.
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PTC has injected cash of around Rs. 7.5 billion in Ufone to enable it to meet its increasing working capital requirement.
Furthermore, it is said that the merger/acquisition of Ufone by/with Telenor/Zong would result in more synergies than those that have been realized by other telecom companies in the past.
A deal between Telenor and Ufone would result in 50% of the subscribers, higher than Jazz, whereas Ufone and Zong will result in 35% of the subscribers which will be at par with Jazz.
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