Technology, media and telecoms (TMT) investment group Zegona (ZEG) is starting to create some value through its 'buy-fix-sell' strategy. Spanish telecom company Telecable - the group's first acquisition - has enjoyed a decent year, and revenue in the reported period rose 4.4 per cent year on year to €69.2m (£58.5m), which allowed Zegona to record its first half-year revenues.
The majority of that turnover (€50.4m) came from Telecable's consumer business, which supplies 'quad-play' bundles of broadband, TV, fixed-line and mobile telephony and there is significant opportunity for future growth, particularly considering the recovery in Spain's economy. But competition is afoot. In 2012, Telefónica launched a heavily discounted fixed-mobile bundle called 'Fusion', which led to a rapid rebasing of industry prices.
Telecable's ex-Virgin Media executive management team will be hoping growth can be sustained despite this competition. They are heavily incentivised through a long-term programme entitling them to up to 15 per cent of the growth value of the company's enterprise value, subject to a certain level of shareholder return. They also remain on the lookout for further acquisitions and it is expected that these will continue to focus on the Spanish market.
Broker JPMorgan forecasts EPS of 1ȼ per share for the year to December 2016, up from a loss per share of 23ȼ in 2015.
ZEGONA COMMUNICATIONS (ZEG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 103p | MARKET VALUE: | £202m | |
| TOUCH: | 101-105p | 12-MONTH HIGH /LOW: | 160p | 99p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | NA | |
| NET ASSET VALUE: | 189ȼ * | NET DEBT: | 70% | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (ȼ ) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | - | -0.95 | -4.30 | nil |
| 2016 | 70.48 | -4.54 | -1.20 | 2.25 |
| % change | - | - | - | - |
Ex-div: 22 Sep Payment: 14 Oct *Includes intangible assets of €566m, or 289ȼ a share £1=€1.18 | ||||
