Energis shares expected to disappoint investors
Sunday 07 December 1997
Energis, which does not expect to make a profit until 2001, is owned by National Grid. The sale of 26 per cent of the shares is expected to raise up to pounds 228m. The shares were priced at between 250 pence and 325 pence and are due to start trading in London and New York on Tuesday.
It is conventional practice to value companies, which are not profit making at the time of their sale, by "net present value" rather than on the basis of earnings per share. Net present value estimates cash flows into the future. Most of the recent telecommunications companies have been sold on this basis.
"People don't trust these sales based on net present value after the experience with Telewest, Eurotunnel and others," said Steve Scruton, telecommunications analyst at HSBC James Capel.
Shares in Telewest, the cable company, are worth less than half than their sale price of 182p in November 1994 at Friday's closing price of 73p. Shares in Ionica Group, a company that competes with British Telecom with a wireless service, are worth around a quarter of their sale price of 390p at 102.5p.
Mr Scruton said Energis could be worth less than a third of the pounds 1.3bn valuation set in August by the investment bank Dresdner Kleinwort Benson, which is managing the flotation.
Energis has spent pounds 575m building a nationwide fibre-optic network by stringing cable along the National Grid's electricity pylons, which it claims is more advanced than its rivals' networks. It targets only business customers with high-volume advanced services because they offer bigger margins.
Energis has had its share or problems, including management disagreements, which led to the departure of former chief executive David Dey in 1995.
Copyright: IOS & Bloomberg
- 1 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 2 The secret report that helps Israel hide facts
- 3 Is Ebola coming to Britain? UK health officials issue warning to doctors as outbreak fears grow
- 4 Richard Dawkins says 'date rape is bad, stranger rape is worse' on Twitter
- 5 Danish TV reporter is all business up top, all party down below
The secret report that helps Israel hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Boozy, ignorant, intolerant, but very polite – Britain as others see us
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
- < Previous
- Next >
iJobs Money & Business
£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...
£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...
£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...
£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...