Page 10, point 2.5(c) of the announcement dated 16/04/13 highlighted that "The objective of the Investors is to build the business of TSI India and seek a strategic sale of their investment". What's also highlighted on page 11 point 2.6(f) is that the 30th August 2016 is the 'latest' target date to keep in our minds re an IPO listing of TSI India if a trade sale doesn't materialise. Refer to announcement below.
Now, there's nothing to say that this time frame couldn't change if both CX Partners and TSN felt they weren't in the best strategic possible position for a trade sale or an IPO listing. What could be the reason for such a change of plan? The obvious would be in order to buy some more time to get more ATMs/Bill Payment machines installed and operating prior to a sale.
Since that announcement, we shareholders have been aware that this is what the company's objective has been all along. At any stage from that announcement dated 16/04/13 a sale could have eventuated if the opportunity presented itself. So far it hasn't. As per the 2013 Annual Report, at the time the company had 1072 ATMs operating as at the 31st March 2013.
We are now well over two years since that announcement dated 16/04/13 was released to the market. TSI India will soon have 2300 ATMs and 400 Bill Payment machines online. Obviously today would be a much better time to extract the best possible strategic material outcome if the opportunity presented itself, having a greater number of machines online across their two businesses. But, are the number of machines currently online still ample to get the best possible return on their and our investment? How do they maximise on their objective? Well, we now know that one year has passed since the last two contracts for a total of 800 ATMs were awarded to TSI and not all ATMs are installed and operating yet. They still have a few more to go. Once they do, they will have 2700 (2300 ATMs and 400 Bill Payment) machines. Note, a 200 E-Kiosk contract was awarded in July 2015.
So, if it's a trade sale they intend to achieve within now less than 12 months, what's the most expeditious solution to add the maximum possible value to the company prior to a sale? I believe the company's current and prospective objectives are sound and on the right track.
TSI India's current business model:
1. Deployment of ATMs for their existing or prospective new bank clients.
2. Deployment of Bill Payment/Kiosks for their existing or prospective new clients.
TSI India's potential new business model strategy:
1. Manage new small to mid sized banks ATMs.
2. Buy new small to mid sized banks ATMs.
TSI India's existing current business model and potential new business model strategy could be game changers. What would TSI India need to work diligently towards over the next 12 months?
1. Win a few more ATM contracts at some stage this year, the earlier the better imo, as as I highlighted above, ATMs take time to come online as well as gain traction.
2. Win more Bill Payment/Kiosk contracts. Not as expensive as ATMs, much quicker deployment and very good margins. Remember in the 2007 Annual Report the company highlighted that they were collecting approximately AUD $0.15c per transaction from their iPAY Bill Payment Machines. That was eight years ago! That figure appears to be averaging AUD $0.20c today?
3. Should the company be successful with winning agreements with new small to mid sized banks to manage their ATM fleets, well, you already know my stance on this.
4. Should the company achieve their objectives with buying new small to mid sized banks ATM fleets, transaction volume & revenue for both points 3 & 4 that I have highlighted here should be immediate.
Tony
TSN Price at posting:
0.6¢ Sentiment: Buy Disclosure: Held
