Slovenian Weekly Report 6.11.2017-10.11.2017
On 9th November 2017 Telekom Slovenije announced that pursuant to the agreement to merge its Macedonian operations into ONE.VIP d.o.o. conducted on 22nd October 2014, Telekom Austria Group (owning 55% of ONE.VIP) exercised its call option, namely buying TS 45% stake for EUR 120m.
o Telekom Slovenije also had a put option, which it intended to exercise at the end of the 3 year period following the merger conclusion. Effect is the same.
o It‘s Macedonian operation generated only roughly EUR 10m to 11m of EBITDA per year (before the merger) and was a drag on Telekom Slovenije results – never been able to provide a proper turnaround. However the agreed price was therefore excellent for Telekom Slovenije, but should be understood that Telekom Slovenije had at the same period settled mutual relations with Telekom Austria operations in Slovenia.
o This was recognized in balance sheet and income statement for 2015.
o However EUR 120m cash flow is now a fact; and this amount translates into hefty EUR 18.36 per share. To put the mentioned amount into perspective: last year dividend was EUR 5, 2016 EPS 6.1, last year CAPEX 148m, TTM net debt at EUR 394.4m, EBITDA guided for 2017 at EUR 206.8m.
All in all our conclusion in past research reports was “We therefore still believe Telekom Slovenije is fairly valued, however the investors are currently ignoring this pending cash flow … therefore if, or better when, the option is exercised, we believe share price will also jump toward our target price”.
Day after the announcement share price increased by EUR 3.35 to EUR 84.6.
ALTA Invest, investicijske storitve, d.d., (ALTA Invest, investment services, Inc.) is a part of ALTA Group, the biggest financial non-banking group in Slovenia. ALTA Invest has around 28% market share on the domestic Ljubljana Stock Exchange and has more than EUR 95m of assets under management.
Our trading advantage is our execution of large trading blocks with low impact on the market. We offer trading on several platforms on numerous markets, with a wide variety of financial instruments. Our advantage is also a research department, which is both sell side and buy side and has the far most extensive and regular coverage of domestic companies. We cover 9 companies on Ljubljana Stock Exchange, which is around 90% of Mcap on LJSE – and here we are practically the only local broker providing this kind of extensive and regular coverage for Slovenian companies.
A part of ALTA Group are ALTA Skladi, a mutual fund asset management company with roughly EUR 260m of asset under management. ALTA Group is also extensively involved in corporate finance projects and raised considerable assets (fixed income and equity) in the last two years for several companies.
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