The value of Telekom Serbia, the state-controlled telecommunications company, is according to analysts very questionable and data on its business operations are quite non-transparent, said N1's economics editor Vojislav Stevanovic.
Speaking in ‘Dan uzivo’ programme on Saturday, Stevanovic said the company belongs to all citizens although it is not a typical public enterprise.
“It would be best to see its value on the stock market so the investors could assess that value in the best possible way. The analysts whom we consulted have conducted analyses based on the publicly available data and using the methodology used in these cases,” he explained.
To assess the value of a company, it is necessary to make a comparison with other companies, said Stevanovic.
He explained how the telecommunication companies are traded on the market, noting that their price equals to 5-6 multiplied by their ‘EBITDA’ i.e. their profit before any interest rates, dividends etc.
“Then, that’s taken as the value is the company’s total value and those are some relative rates. Relative rate of the company’s total value plus ‘EBITDA’. Also, when it comes to the profit, the analysts emphasise it is necessary to treat the capital investments in a very specific way,” he stressed.
The structure of this industry is such that it requires significant investments every year because of technological innovations, explained Stevanovic, adding that in the past a company was gaining the profit for years only thanks to the construction of telecommunications network.
“The analysts also noticed that the costs of software rights are also calculated as investments, which is not visible in ‘EBITDA’. If we take those details into consideration and compare to other companies, we can come to various conclusions,” he added.
According to analyses, Telekom Serbia is far from the price of four billion Euro, said Stevanovic.
“Let me remind you that several years ago Telekom’s estimated value was over billion and a half Euro. That price was not satisfactory at that moment. In the meantime, Telekom’s debt significantly increased, the company got involved in many investments. I will also remind of Kopernikus, 200 million Euro, how justified that was? Next, the software rights are also an interesting issue. Telekom recently gave money for important European competitions and we’re speaking about the sum of more than 100 million Euro for the next three years,” he added.
He stressed that this investment was necessary because all other commercial companies were unable to provide that sum.
“In this case, Telekom obviously followed its own business logic, but no analyst that I spoke to told me there is a way to have that money returned. As for the profit, i.e. the value, they reported ‘EBITDA’ Of 410 million Euro but the analysts say that after certain corrections, which are necessary because of different accounting standards, the amount will drop to 362 million Euro,” explained Stevanovic.
“If we multiply that with average value, you get the company’s value of two billion Euro. If we decrease it by Telekom’s huge debt of one billion and 152 million Euro, we get 875 million Euro value. If ‘EBITDA’ is decreased by the capital investments, which amounted to over 600 million Euro last year, then the result is negative which practically means that Telekom cannot cover those investments with its profit,” he added.
This is why the company needs borrowing, he stressed.
Speaking about the transparency of Telekom’s business operations, Stevanovic said it is very hard to get any data on this.
“If we see the data and if the debt is increasing, if analyses show that the company’s value is declining, then we all should be concerned about why this is happening and demand the answer how long is all this going to last,” Stevanovic concluded.
