Jun
18
NWT: The victim of CapEx - June 18, 2008
Filed Under Bullet-moments |
NWT is the first company among IRCs to publish its IAS-compliant financial results of 2007. NWT results versus 2006 could be called positive. The sales increased almost up by +25%, OIBDA margin rose by +4.3 p.p. to 36.5%. For now we cannot compare the company to other IRCs, however the enterprise demonstrated some significant rates of growth, which are rather significant in our opinion.
However, there is always one drop of poison in the barrel of wine – whereas the most significant contributions into the growth of sales was formed by the local communications (+23%), through introduction of new tariff plans, to be precise. Almost a half of natural person subscribers of NWT chose unlimited calling plan (tariff), thanks to which company’s ARPU of the year 2007 rose at about +24% (in our estimates). Just as we have indicated before – local communications could be the long-term factor of growth, due to low growth rate of subscribers’ base and tariff limitations. Whilst the primary factor to propel the development was expansion of internet-access market. During the past year the number of broadband subscribers of the company rose over 3.5 times and formed 310 th people. This year NWT expects to double this value. Thus, the more company accomplishes of its plans the more investment appeal she would acquire.
Additional negative factor for stocks of NWT is aggressive investment plan of next five years, forming just over 50 bn RUR. Although the benefits of this program are not as obvious as plan’s value. Above all it is related to universal communication service – only in 2008 NWT is set to invest 3.6 bn RUR into this segment.
We have reviewed our financial model of NWT considering the published data and company’s own forecasts. According to our estimates new target forms 1.3290 USD on common and 0.9967 USD on preferred stocks (previous targets were 1.5002 USD and 1.1251 USD respectively). The most significant negative influence upon our targets was made by company’s aggressive investment plan. Our new recommendations are “HOLD” (confirmed) on common and “ACCUMULATE” on preferred stocks of NWT (prior recommendation – “HOLD”). Do note that our estimates do not consider possible privatization of Svyazinvest. We must also add that announcements of Russian authorities could seriously shake the quotes of NWT and other IRCs, though we prefer to wait for more concrete steps about the privatization.
NWT: The victim of CapEx - June 18, 2008 (PDF)