PrimeTel, Cyprus’ alternative telecoms provider is eager to become the third mobile telephony player in Cyprus with the money to be raised from its forthcoming initial public offering (IPO) to be used to fund the group’s expansion drive.
PrimeTel’s IPO will start on 9 June and will run until 18 June. A total of 15.1 mln shares are on offer, including 7.5 mln to investment groups, 4 mln to subscribers and 2.85 mln to the general public. A total of 750,000 free shares will be offered to staff and executives.
PrimeTel Managing Director Hermes Stephanou told an investor presentation in Nicosia that the offering price has been fixed at EUR 0.36 per share, with the money to be raised from the issue amounting to EUR 5.1 mln to be used to finance an ambitious expansion drive that among others also includes becoming a Mobile Virtual Network Operator (MVNO).
An MVNO is a mobile operator that does not own its own spectrum but enters into business arrangements with traditional mobile operators to buy minutes of use (MOU) for sale to their own customers.
“According to an internal survey, 84% of our 15.000-strong subscribers want us to provide them with mobile telephony services,” said Stephanou, adding that the Regulator has already called for public consultations on the matter with a decision on how Cyprus will proceed expected by early 2009.
The company will also offer a total of 26.267.000 free warrants in the ratio of 1 for every 6 shares subscribed, to be exercised in 2011 at a 30% discount to the average price prevailing three months prior to conversion. The issued share capital at present amounts to 142.5 mln shares of EUR 0.17 nominal value.
Stephanou said the number of subscribers, now at 15.000 are expected to increase to 25.000 by year-end and climb to 40.000 by 2009, increasing at the same time PrimeTel’s reach in the market.
Based on the issue price of EUR 0.36, the price to earnings (p/e) ratio of PrimeTel for 2008 is 80 times with a forecasted net profitability of EUR 700.000 and a book value of 4.3 times. According to Financial Mirror calculations, the market cap of PrimeTel will amount to EUR 56.7 mln.
The p/e of PrimeTel for 2009 will however improve tremendously to 11 times, implying net profits of EUR 5 mln on the back of the massive increase in subscriber numbers combined with a tight control on cost increases.
The company says it will be in a position to give a dividend after three years when all prior year setup losses are recovered. The major shareholders have given a commitment not to sell shares in the open market.
PrimeTel launched its Triple Play (Internet, TV, telephone) service for homes in January 2006 in the first effective challenge to state-owned CYTA. It built and operates an island-wide, fully autonomous fiber-optic network boosting the network coverage to more than 250,000 households.
PrimeTel owns and operates a regional network spanning Greece, Cyprus, Russia and the UK, providing network connectivity, data communications and IP-based services. It is one of the few in the region that provide the full spectrum of telecom services.
PrimeTel is 54% owned by Thunderworx, but its parent company is Teledev East, which holds a direct and indirect 60.53% stake in the company. Teledev owns and operates telecoms networks outside Cyprus and also owns Thunderworx, Telecet, Formula Plus and TimeOnline in Russia.
Perikles Manglis is Chairman of PrimeTel. The others members of the board are Nikos Ellinas, Andreas Christodoulides, Philippos Vatiliotis and Ioannis Tirkides. The group employs a total of 220 staff.
The other principle shareholders of PrimeTel are Manglis Holdings with a 19.22% stake and Celltech Ltd with a 19.22% stake.
