The op­tions spread

A hand­ful of re­cent list­ings have broad­ened the in­vestable tele­coms uni­verse

Finweek English Edition - - Companies & markets - BELINDA AN­DER­SON

UN­TIL FAIRLY RE­CENTLY in­vestors seek­ing ex­po­sure to the fast-grow­ing telecom­mu­ni­ca­tions mar­ket only re­ally had a choice of two: Telkom and MTN. How­ever, the uni­verse of shares has swelled lately af­ter a num­ber of new AltX list­ings. And as the lines be­tween IT and com­mu­ni­ca­tions be­come in­creas­ingly blurred, other op­por­tu­ni­ties will also open up.

Of course, risk-averse in­vestors and larger in­sti­tu­tions – many of which nor­mally don’t in­vest in AltX com­pa­nies – would say the op­tions re­main lim­ited.

How­ever, telco in­vestors must be pre­pared for a lit­tle risk. And for fans of the AltX now there are at least a num­ber of choices, in­clud­ing cel­lu­lar prod­uct and tech­nol­ogy com­pany Cel­com, African Cel­lu­lar Tow­ers and, most re­cently, rout­ing busi­ness Telemasters. You could also in­clude call cen­tre busi­ness Di­a­logue Group and must def­i­nitely not for­get fast-grow­ing al­ter­na­tive telco Dat­apro, which listed in 2004 and re­cently com­pleted the sig­nif­i­cant pur­chase of rout­ing com­pany Orion.

Ac­cord­ing to the FTSE/JSE clas­si­fi­ca­tion sys­tem, two other com­pa­nies fall into the tele­coms land­scape, more specif­i­cally telecom­mu­ni­ca­tions equip­ment: Al­tech and Foneworx.

With sub­sidiaries in­clud­ing large in­de­pen­dent ser­vice provider Al­tech Au­topage Cel­lu­lar, lead­ing ve­hi­cle­track­ing com­pany Nets­tar, and Al­com Ra­dio Dis­trib­u­tors and Al­com Matomo, Al­tech of­fers pretty well rounded, in­di­rect (in the sense of it not be­ing an op­er­a­tor) ex­po­sure to the tele­coms sec­tor.

De­spite the rel­a­tively new name, Foneworx isn’t a new com­pany but the busi­ness of In­ter­con­nec­tive So­lu­tions, which put the name change to share­hold­ers in Novem­ber 2006. The small com­pany said that would more cor­rectly re­flect its mar­ket­ing strat­egy and align the listed name to its main trad­ing name.

Foneworx – which of­fers a variety of au­to­mated “in­fo­tain­ment” and busi­ness ser­vices, such as on­line sur­veys and Fax2Email over a pro­pri­etary voice and data plat­form – re­cently posted pos­i­tive in­terim num­bers and said it was con­sid­er­ing an im­mi­nent move from the main board ven­ture cap­i­tal mar­ket to the AltX.

New list­ing Telemasters CEO Mario Pre­to­rius says it went pub­lic to raise its profile to po­ten­tial part­ners and cus­tomers ahead of pos­si­ble cap­i­tal rais­ings at a later stage. Those would be aimed at con­sol­i­dat­ing the mar­ket, says Pre­to­rius, adding that it wanted to be a “shark” rather than end up be­ing eaten.

Telemasters only floated 15% of its shares – Pre­to­rius owns the rest – of­fer­ing them at a low 50c/share, mostly to deal­ers and staff. The price is now 285c/share (pushed up on only 678 518 shares traded over the first few days).

Pre­to­rius con­cedes there would have to be sub­stan­tially more shares avail­able if it wants to do deals. A few fi­nan­cial re­port- backs and a higher free float would un­doubt­edly make the list­ing far more in­ter­est­ing to in­di­vid­ual in­vestors and any in­stitu- tions man­dated to in­vest in AltX com­pa­nies.

Last year’s three tele­coms-re­lated list­ings – African Cel­lu­lar Tow­ers, Di­a­logue and Cel­com – have all seen healthy in­creases in their share prices. Di­a­logue re­cently re­ported maiden full-year num­bers to De­cem­ber 2006, show­ing strong growth and good cash gen­er­a­tion. It said it was con­fi­dent of meet­ing pre-list­ing fore­casts for 2007.

African Cel­lu­lar Tow­ers posted promis­ing in­terim re­sults to Au­gust 2006 late last year and the mar­ket will no doubt be look­ing out for maiden full-year num­bers to Fe­bru­ary early this year. Cel­com and Telemasters have yet to re­port maiden re­sults as listed en­ti­ties.

Dat­aPro, whose progress was re­cently well doc­u­mented in Fin­week, con­tin­ues to per­form on the back of the Orion deal and prospects for voice rev­enues. The shares, which ticked up grad­u­ally last year, have al­most dou­bled since the be­gin­ning of this cal­en­dar year.

Other shares that in­vestors can buy for some ex­po­sure to the sec­tor in­clude Di­men­sion Data (for In­ter­net So­lu­tions), Re­unert (for Nashua Mo­bile) and even Jasco, which has po­si­tioned it­self to ben­e­fit from the in­creas­ing roll-out of broad­band.

Spescom has an at­trac­tive call cen­tre busi­ness called Data­Fu­sion, but the hold­ing com­pany hasn’t been a good per­former of late and there don’t seem to be any im­me­di­ate plans to list the sub­sidiary sep­a­rately.

THE EN­LARGED TELE­COMS UNI­VERSE

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