Thursday 12 November 2009

GCC Telecom Sector Report - November 2009 (PDF)

Global Research is delighted to bring our investors a new research product i.e. "GCC Telecom Sector Report”. The report intends to provide among others:

· Quarterly country-wise subscriber base of GSM segment
· Quarterly subscriber base and market share of telecom operators in GCC
· Performance of companies under coverage by Global Research

Highlights:

· Shift in Call Traffic Impacted Revenues of Telecom Operators in Kuwait
Revenue of telecom operators in Kuwait were hurt by regulatory changes as fee charged by mobile operators to receive calls on their network from fixed-line has been scrapped, resulting into a loss of revenue for mobile operators in Kuwait. On the back of this ARPU and margins have been negatively impacted. This regulatory change has far more consequences as there has been a shift in call traffic with increase in fixed to mobile (F2M) calls and declining calls from mobile to mobile (M2M) and also mobile to fixed (M2F). On the back of this Zain Kuwait’s ARPU declined from US$69 in 1H-2008 to US$54 in 1H-2009 while in case of Wataniya Telecom ARPU declined from US$50 in Q3-2008 to US$37 in Q3-2009.


· Zain Stake Sale Deals
With regard to selling of 46% stake in Zain by Al-Khorafi group to Vavasi group and selling of 24.6% stake by KIA (in a separate transaction) at KD2 per share, the deals are valued at 2009E earnings multiple of 24.5x and 2009E EV/EBITDA of 10.0x. In our view, transaction multiple looks expensive. At the same time, the deal provides good exit opportunity to the sellers but there is no clarity on minority shareholders. Ideally, both the stake selling deals should entail an open offer by the acquirer.


· Recommendation
In the telecom sector all the GCC countries have different operational metrics and each company in the region has different operational dynamics depending on its reach in the domestic market, its strategy for overseas expansions and funding strategy. In the GCC telecom space we remain overweight on Etisalat and Omantel.

6 comments:

  1. This major improvement in telecom sector will open the many ways.

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  2. After all its an major improvement so there would be lot of expectations from this improvement.

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  3. This improvement will open the lot of ways in the telecom sector, most of the bench marking companies would be expecting a lot from this improvement.

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  4. We need these kind of imporvements in the telecom sector, we hope this will work fine.

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  5. Character Education Can you define what does it mean by the Bench Mark?

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  6. Benchmarking is the process of gathering information about other companies in your industry to compare your performance against and to use to set goals.

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