These maiden results from Zegona Communications (ZEG) mean little. The key points for investors in the group - which aims to buy and revitalise entertainment and telecoms companies with enterprise values of up to £3bn, then sell them and give the proceeds to shareholders - are its first acquisition and its move to the main market this week. Zegona completed a £251m placing and took a €274m (£202m) loan to finance its €640m takeover of Telecable, which provides broadband, TV and both landline and mobile phone services to around 145,000 households and 19,600 business customers in the Asturias region of northwestern Spain.
Zegona is run by two former Virgin Media executives who oversaw the £15bn sale of the media and telecoms group to American cable-TV giant Liberty Global in 2013. With Telecable, they intend to attract and retain more customers and sell more of the company's products to each household by bundling and cross-selling services. They also plan to introduce new mobile and TV offerings, such as catch-up content and more high-definition channels, and boost productivity through better procurement and more focused investment. Finally, they're considering following Vodafone and other rivals in raising prices, possibly by early next year.
Management hopes to pay a 4.5p dividend in 2016, which equates to a 2.9 per cent yield at the current share price.
| ZEGONA COMMUNICATIONS (ZEG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 155p | MARKET VALUE: | £304m | |
| TOUCH: | 150-160p | 12-MONTH HIGH: | 165p | LOW: 127p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 14p | NET CASH: | £27.8m | |
| Half-year to 30 Jun | Turnover (£000) | Pre-tax profit (£000) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | na | na | na | na |
| 2015† | 3.2 | -691 | -4.3 | nil |
| % change | - | - | - | - |
†Zegona was incorporated on 19 January and floated on 19 March 2015 | ||||
