Netia: Good value; delisting may be on horizon
Following the share price drop (-17% YTD vs -5% for the WIG) we lift NETIA to BUY (from NEUTRAL) and lift our FV to PLN 5.65 (from PLN 5.5), leaving our 18E/19E EBITDA forecasts unchanged but lifting 20E EBITDA by 5% on the back of an expected positive impact from top-line and opex synergies on the CPS acquisition. Once CPS acquires the planned 17.5% stake in NET from Karswell Ltd and reaches a 66% stake, we would not be surprised if it called a tender offer for a 100% stake at PLN 5.77/sh (30% upside), which suggests NET has an attractive and lower risk investment case in a more risk-averse stock market environment. As CPS has already started tests to switch off 800Mhz and transfer data traffic into other frequencies, this suggests to us a low likelihood that it will renew spectrum at PLN 1.7bn which makes the delisting tender offer look more probable within the next 12 months.Netia Holdings is a fixed-line telecommunication operator based in Poland. Co. provides voice telephony and data transmission services. These services include switched, fixed-line voice telephone services (long-distance and fixed-to-mobile services), Integrated Services Digital Network, Voice over Internet Protocol, voice mail, dial-up and fixed-access Internet, leased lines and frame relay and MPLS services. Co. also offers wholesale services (including wholesale termination of inbound traffic, ducts, dark fiber and co-location), services based upon intelligent networks (free phone, split charge and premium rate services) and provides broadband Internet access with ADSL technology.
Haitong is the first international Chinese investment bank and our goal is to be the primary channel for capital flows into and out of China. During 2015 the Senior Management Team in London was expanded significantly to focus on this objective and to provide a full-service cross-asset markets business coupled with sector-focused investment banking. We work closely with our world-wide network of offices to bring a true depth of understanding to all client situations.
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