LKCSE Colombo Stock Exchange Close
  • Current Exchange
    Colombo Stock Exchange LKCSE

Market time
Black
White

Send This Page To Friends and Colleagues

You can Enter more than one email separated by (,)
Allowed 100 characters only
30 November, 2015 10:04 AM Source: Financial Times - Sri Lanka
news 1.jpg

Questions are being raised over the craving by Mobitel, which is listed for sale by the Government, for Hutch Sri Lanka’s operations at an exorbitant price.
In the unity Government’s maiden Budget presented a fortnight ago, Mobitel was included among state companies which will be divested via the Colombo stock market.
Despite pending state divestiture, Mobitel via its parent Sri Lanka Telecom, is apparently pursuing plans initiated under the previous regime to buy the loss-making operations of Hutch and consolidate its position in the highly competitive mobile telecom industry.
For want of better pricing, the previous administration at the Treasury halted SLT-Mobitel’s overtures on Hutch.  The move is being pursued with greater zeal too despite the promise of good governance and prudence by the President Maithripala Sirisena-Prime Minister Ranil Wickremesinghe Government. It is claimed that SLT-Mobitel is keen on buying Hutch at $ 130-140 million whereas when Dialog did a due diligence, the latter’s valuation was put at around $ 60 million.
Industry analysts have emphasised that for SLT-Mobitel, the Hutch proposition could be at $ 80-90 million and not at the exorbitant valuation of $ 140 million.
Last week Fitch Ratings maintained a negative outlook on Sri Lanka’s telecom sector. This is based on uncertainty over proposals to increase taxes, which are likely to lower profitability and increase leverage for telcos, if implemented.
“We expect the industry’s 2016 revenue to grow by the mid-single digit percentage, driven by data services as cheaper smartphones proliferate. Yet, apart from the tax impact, profitability may still decline in 2016 as low margin data services replace traditional, more profitable voice/text revenue,” Fitch said.
“Two smaller, unprofitable telcos Hutchison Lanka and Bharti Airtel Limited’s SriLankan subsidiary, Airtel Lanka may exit the industry amid competition and the uncertain tax regime,” Fitch added.
Given the negative outlook for the industry, analysts are questioning SLT-Mobitel’s move on Hutch as well as exorbitant price of $ 140 million to be paid if the Yahapalanaya Government turns a blind eye.
Acquiring a loss-making operator such as Hutch at such a cost is expected to impose a heavy burden on SLT, which styles itself as the national telecom service provider.
In the first nine months of 2015, the SLT Group recently reported revenue of Rs.50. 8 billion, up by 6% with both fixed and mobile telephone segments contributing to the success.
In a statement SLT said the group had reported a healthy EBITDA margin of 32.3% during the period under review against the 30.9% a year earlier due to maintenance of higher revenue growth than the rate of operating cost escalation. The operating cost of the group was reported at Rs. 34.4 billion with a year on year growth of 4%, while the EBITDA grew by 11% to Rs. 16.4 billion during the first nine months of 2015. Depreciation and amortisations remain at the same level of Rs. 9.8 billion.
SLT said the bottom-line of financials of the group was largely negated by provisions for foreign currency translation losses relating to foreign currency denominated borrowing due to the sudden depreciation of the LKR against the USD. 

- See more at: http://www.ft.lk/article/502041/Questions-over--up-for-sale--Mobitel-s-craving-for-Hutch-at-exorbitant-price#sthash.8lPMWOyR.dpuf

Add Comment | 0   comment

Readers Comment

Nothing found to display
page number 1

Add Comment

Please login first to comment Click here to login

Stocks in Focus


Features for Registered Users

E-mail Alerts
Daily Newsletter
Your Watchlist
Advanced Tools
and
Many more


Will automatically display the last quotes you have visited here.

All Rights Reserved - DUInvest © 2014

Login

Do You have an Account ? , Click here to create a new account

Your Opinion Matters

What do you think about the new Website?