Copy of today's Communications Day article regarding ATC:
Telstra CEO eyes stake in Advantel ahead of junior carrier’s foray into China
Telstra chief executive Ziggy Switkowski is looking at a proposal to potentially invest around $9 million in Perth-based wholesale traffic carrier Advantel, which needs to raise funds to close its acquisition of UK-based calling card operator FNT. Sources told CommsDay that Switkowski has received an internal proposal to take an $8.6 million strategic stake in Advantel, which this week revealed an ambitious deal to dramatically boost the size of its business by acquiring FNT. “We know absolutely nothing about it and we haven’t had any approaches,” said Advantel spokesman Peter Pappas. “I can confirm that we are seeking strategic investors to further fulfil our expansion opportunities in China.’’ Advantel is expected to release its fourth quarter financial report in the next few days and the revenue growth is expected to be extremely strong. The company currently has contracts with 28 carriers to carry around seven million minutes of voice traffic per month. However, in May the company clinched a deal to carry 10 million minutes of voice traffic every month for China Mobile. Telstra did not provide a response to CommsDay by press time. The company has indicated that its investment expansion strategy lies in Asia, as witnessed by the joint venture deal it clinched with Shanghai General Electronics (Group) Co. this week. In essence, taking a position in Advantel could fast-track Telstra’s push into China. Former Hong Kong Telecom executive Mark Stewart, now chief executive of Advantel, has impeccable relationships with executives at Chinese telecommunications carriers and with senior telecommunications ministry officials in Beijing. Telstra may also consider a full takeover of Advantel down the track, given that it competes with its Asian-based wholesale connectivity joint venture Reach. A possible investment in Advantel would help the Eurasian voice carrier raise the funding required to close the FNT deal, while Telstra would get access to its fast-growing revenue base and its relationships with more than 30 international carriers.
Also, a copy of yesterday's report from Communications Day:
Advantel makes play for UK prepaid calling card operator
Perth-based wholesale traffic carrier Advantel has announced plans to acquire UK prepaid calling card operator First National Telecommunications Group (FNT) for around $77 million, in a deal that will give the Australian a big lift in revenue and profit. As foreshadowed by CommsDay last week, Advantel has made a transaction aimed at boosting its critical mass in order to increase its ability to fund future network expansion. Indeed, FNT makes profits from its fiveyear old prepaid calling business, and will reap revenues of around $175 million this financial year. “The FNT transaction means that further expansion is underpinned by AdvanTel's strong revenue growth rate coupled with FNT’s prepaid cash receipts through the calling card business,’’ said Advantel chief executive Mark Stewart. The acquisition will propel Advantel’s forecast net operating profit after tax to $27 million in the 2002 fiscal year. Advantel’s success to date has been based on carrying wholesale voice traffic between Asia and Europe and the company has boosted revenue significantly in recent quarters thanks to new agreements with international carriers. The company now plans to offer prepaid calling services via FNT. “AdvanTel is capitalising on the volume-based growth from its Asian clients and will now carry FNT calling card traffic,’’ Stewart said. “In turn, the FNT business will benefit from market access into Asia through AdvanTel’s established Asian client base,” Stewart said.
The company immediately took advantage of the sharemarket’s enthusiasm for the deal, by raising $11.3 million in a share placement at 42 cents per share. That money will fund working capital requirements stemming from the deal, while it also wipes out the company’s debt, apart from vendor financing and trade creditors. “This gives AdvanTel enormous scope going forward,” said Stewart. “The combined group will be profitable and debt free with forecast revenues exceeding $210 million per year.” The company said it was confident it could raise further funds for the cash component of the acquisition, which is subject to approval. The cash element of the acquisition is $37.5 million, to be paid over the next 21 months, including a final payment of $5.3 million. That final payment is dependent on FNT meeting certain profit targets.
ATC Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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