Colt Telecom Share Discussion Threads

[dickbush] 13/2/2015 12:02

dealy

I may have this totally wrong but looking at the Dec 31st figures (it's year end is June 30th) and annualising the first half's EBITDA I come up with

EBITDA $750 mil
Net Debt $2.8 bil
Mkt cap $6.7 bil

Which gives an EV/EBITDA of 12.67 times.

What figures do you have?

I note that the Net Debt/EBITDA is 3.7 times which is pretty hairy and they appear to have done a major acquisition for debt already this year.

Even on this valuation the shares look massively overvalued. It's just an acquisition machine so beloved of investment bankers in bull markets.

[robwt] 13/2/2015 10:41

Or maybe, just maybe, those AT&T talks are correct. Would be good if it were true and other players are sitting watching. Certainly the share price is beefing up on low volumes, so someone is buying whats available.

[palace andy] 13/2/2015 09:50

Price is rising nicely recently, I assume this is just on expectation of improving data in the next earnings release on the 26th?

[dealy] 13/2/2015 07:46

Zayo has an EV/Ebitda ratio of 22. Colt still on about 4 times. Merger or takeover could happen sooner rather than later.

[dickbush] 11/2/2015 10:55

Nice work if you can get it, palace andy. I'll pass.

dealy, Telecity reported their 2014 results. They look OK but not really sufficient for the share's rating. Shares currently up 14% on a merger that will almost double its market cap. Throwing out some pretty big numbers for "synergies". Announced a £400mil share buy-back over three years and raised its target for Net Debt/EBITDA from 2 times to 3 times. It all sounds very aggressive.

This is the acquisition:

Interxion also announced certain unaudited financial information today for the three months and year ended 31 December 2014.

Revenue for the fourth quarter and full year is expected to have increased by 15% and 11% to approximately €89.9 million and €340.6 million, respectively (4Q 2013: €78.2 million; FY 2013: €307.1 million)

Adjusted EBITDA for the fourth quarter and full year is expected to have increased by 14% and 11% to approximately €38.7 million and €146.4 million, respectively (4Q 2013: €33.8 million; FY 2013: €131.8 million)

Adjusted EBITDA margin for the fourth quarter and full year are expected to be approximately 43% and 43%, respectively (4Q 2013: 43.2%; FY 2013: 42.9%)

Capital Expenditures, including intangible asset, are expected to total approximately €47.5 million in the fourth quarter and €216.0 million in the full year 2014

Telecity is paying a very full price. Interxion gets 45% of the combined group's equity while 2014's EBITDA is only 40% of the combined group. This is the first time I've seen Telecity do a deal that didn't add immediately to EBITDA/share. It will need those synergies if it is going to show growth in EBITDA/share in 2015.

Note that the new Telecity will have a market cap of over £3.5bn and a 2014 EBITDA of circa £274m. Telecity's Net Debt was £317m. I haven't seen the figure for Interxion but, obviously, the target of 3 times EBITDA suggests that Net Debt is going to rise very substantially. Assuming 10% growth in EBITDA in 2015 and Net Debt is "only" 2 times, then the prospective EV/EBITDA is circa 15 times. I must remember to short this again.

[palace andy] 11/2/2015 10:00

Hi DB,

There was a link on the page to the actual report, but its just under $2k to purchase! Sorry, no further info.

PA

[dickbush] 10/2/2015 18:26

Many thanks, palace andy. I don't suppose you have the link to the strengths and weaknesses of the companies in the analysis, do you?

[palace andy] 10/2/2015 08:55

hxxp://www.businesswire.com/portal/site/newsnow/index.jsp?ndmViewId=news_view&ndmConfigId=1004992&newsId=20150209005036&newsLang=en

[palace andy] 10/2/2015 08:52

I have always said that merging KVH with Colt would be the first step for Fidelity if they were to sell up. They have done that, I now expect a couple of quarters to let the dust settle and see the benefits before a sale happens. I could be totally wrong, maybe there are no plans to sell. But with Ned J stepping aside and following that KVH being merged, I think Abby J is looking for a sale.

[dickbush] 09/2/2015 18:08

Thanks for that, robwt. I haven't seen that before.

[robwt] 09/2/2015 16:54

The volumes seem to be getting less and less. Very small deals in what the MMs are messing around with. Always hots up after 2.30pm. It is hard to guage.


Maybe something true from this April 2014 piece from Telecom Ramblings...

hxxp://www.telecomramblings.com/2014/04/colt-sale/

[jacko07] 09/2/2015 03:31

Hope you are right. I have been holding these for so long hoping for the old dys when they were a city favourite.

remember (1999)

[dickbush] 08/2/2015 12:48

If, IF, we continue to have a positive market background and the 4th qtr lives up to RB's statement in the 3rd qtr report

"The actions noted above are focused on returning the business to profitable revenue growth and improved return on investment. We expect to see signs of this in the fourth quarter of 2014."

then we could see Colt continue this strong run, perhaps to the high last year.

Fingers crossed.

[dickbush] 06/2/2015 22:46

UTV creates 120 jobs, connected by Colt, Enet
Friday 6 February 2015 | 09:25 CET | News

The launch of Northern Irish TV channel UTV in the Republic of Ireland has created 120 jobs in Cork, Limerick, Galway, Waterford, Belfast and its Dublin head office. UTV Media laid cable, built studios and installed new satellite systems. The five biggest cities are linked through U-Net in-house communication links designed to carry data and pictures. In a related move, Eenet, the operator of Ireland's state-owned metropolitan area networks, signed an agreement with Colt Technology Services Ireland to provide fibre capacity to UTV studios in Cork, Limerick and Galway. The first two are housed in local news studios already owned by UTV Media. Colt is providing a network, data centre and IT services via Enet's MAN infrastruture in the three cities.

[dickbush] 05/2/2015 09:12

BT announces takeover terms for EE. See below for details. I've never seen discounted acquisition synergies applied to calculate the EV/EBITDA multiple but it looks as though the multiple is more like 7.4 times ex the value of discounted synergies. (£12.5+3.0)/£2.1bn). Note this excludes the revenue synergies which don't appear to be included in the statement below.

"-- The Transaction values EE at a multiple of 6.0x 2014 EBITDA and 9.6x 2014 OpFCF, adjusted for the net present value of the operating cost and capex synergies.

-- BT expects to achieve combined operating cost and capex synergies of around GBP360m p.a. in the fourth full year post Completion. This is equivalent to a net present value of around GBP3.5bn before integration costs or around GBP3.0bn after integration costs.

-- BT expects to generate revenue synergies by providing a full range of communications services to the combined customer base. This includes BT selling its broadband, fixed telephony and pay-TV services to those EE customers who do not currently take a service from BT. BT also expects to accelerate the sale of converged fixed-mobile services to BT's existing consumer and business customers and offer new services, using both companies' product portfolios, skills and networks. BT expects to generate revenue synergies with a total net present value of approximately GBP1.6bn"

Sorry, I'll maths that again.

(£12.5-3.0bn)/EBITDA =6.0. So EBITDA = £1.6bn. Ex discounted net operating and capex synergies, we get £12.5/1.6 = 7.8 times.

.

[dickbush] 04/2/2015 19:59

Colt boosts investment in Portugal
Wednesday 4 February 2015 | 13:16 CET | News

Colt's vice president of network services, Zhongmin Guo, told a news conference that the operator completed an expansion of its network in Portugal, which now connects Porto, Lisbon and Madrid through a closed loop fibre with high throughput and low latency. The new investment has increased network capacity up to 1.6 Tbps and provides access to more than 500 buildings and 11 data centres in Portugal, reports Tek. It allows high-speed services at up to 100 Gbps with a latency of 3.7 milliseconds. Acquisition opportunities that may arise in Portugal also will be analyzed, according to Guo.

[palace andy] 30/1/2015 09:22

Nothing exciting, but an interesting read on how Colt supports the Berlin film festival

hxxp://www.tvbeurope.com/colt-rohde-schwarz-behind-scenes-berlinale/

[robwt] 28/1/2015 13:05

Reading that is all much of the same drudge and pretty much uninspiring. Why does Colt seem to be have been stuck in a gigantic rut for years. I am tired of watching paint dry and fade. The management should be ashamed of the share price performance and the loss of billions of shareholder value. Bhasin has really done nothing during his failed tenure.

[dealy] 28/1/2015 12:54

Thanks Mirko. The announcement today about the exchanges in Asia being connected is also very positive. At some point there will either be a re-rating of the shares to reflect the strategic nature of the company or it will be acquired. Patience....

[robwt] 23/1/2015 15:44

Thanks DB...You are correct..it doesn't sound like they are after Colt. But there is a rumour Colt have been approached and you are correct in saying Colt's business telecom strengths would help AT&T. If it happened, what would two or three billion be in comparison what AT&T would get. I am more confident now that if it isn't AT&T, Colt is ripe for being taken this year.



Business week..
AT&T Inc. (T:US) Chief Executive Officer Randall Stephenson can see diamonds in Europe’s rough.

Stephenson and his top lieutenants are drawing up a takeover wish list of wireless carriers in Europe, from giants Telefonica SA (TEF) and Vodafone Group Plc (VOD)’s assets to U.K. mobile-phone venture EE, according to people familiar with the company’s plans, betting AT&T can win customers and increase profits by rolling out faster, fourth-generation networks.

Plagued by profit-crimping price wars and regulations that threaten to further erode margins, European carriers also offer some of the world’s best takeover values. Telecommunications carriers on the continent are trading at a 36 percent discount to U.S. rivals, according to data compiled by Bloomberg.

[dickbush] 23/1/2015 13:55

I'm not a subscriber so I couldn't read the article but I did see the words Europe and Wireless. That doesn't sound like they are after Colt even though, as reports have previously shown, Colt's business telecom strengths would cover AT&T's weaknesses and vice versa. One day...

Well done, robwt, on the Tesco trade.

I notice that the Yen has appreciated by about 10% versus the Euro since the Japanese company was acquired. Every little bit helps!

[palace andy] 23/1/2015 13:49

And it looks like they have the money lined up for acquisitions, although its thought the money is for spectrum auctions.......

hxxp://www.totaltele.com/view.aspx?C=5&ID=488675