Market Report: Telecoms industry rings in the changes
Wednesday 04 September 2013
The telecoms sector was the talk of the town as deals flew in for Vodafone and Nokia this week, but traders still had time to pile into Scottish tiddler Pinnacle Technology.
Aim-listed Pinnacle is a telecoms outfit that specialises in communications for large events and has worked on the Olympics, the Queen's Diamond Jubilee and the Chelsea Flower Show.
Yesterday it soared nearly 24 per cent when it emerged fellow Aim-lister, and internet broadband provider, Coms said it is considering an offer for the group.
Coms is expected to offer 21p a share – 3p above Monday's closing price. Pinnacle jumped 4.25p to 22p following an announcement that Coms is in talks that are at the "very preliminary stage". Coms slipped 0.55p to 3.63p.
Coms has until 30 September to make an offer for the group, which reported a pre-tax loss of £1.09m for the half year in June. Pinnacle has hired N+1 Singer as its adviser.
Traders' chit-chat also marked out the TV, internet and mobile network group Talk Talk as a possible next potential target for Vodafone. The rumour sent mid cap TalkTalk's shares up 2.2 per cent.
The trader chatter accompanied a buy note from analysts at JP Morgan. The broker's telecom expert Carl Murdock-Smith said the competition posed by the sports TV business of BT will not threaten TalkTalk, which has customers at the budget end of the spectrum.
Mr Murdock-Smith said the group, run by Dido Harding, will become a "cash cow with low gearing" if it invests further in TV, so he upgraded it to overweight and raised the target price to 300p.
TalkTalk rose by 5.5p to 253.5p.
The telecom sector has been flavour of the week with one of the biggest corporate deals ever being unveiled on Monday with Vodafone selling its 45 per cent stake in Verizon Wireless to US partner Verizon Communications in an £84bn deal. Vodafone slipped back 10.7p to 202.5p but it had gained nearly 13 per cent since details of the deal emerged last week. The focus on telecoms remained yesterday the news from the US that Nokia has sold its mobile phone business and access to its patents for €5.4bn (£4.6bn) to the US software giant Microsoft.
After a bumper day across the wider market on Monday when the benchmark index finished 1.45 per cent better, traders couldn't manage to stay in a positive mood and the FTSE 100 slipped back 37.78 points to 6468.41.
The run of bad luck at Tullow Oil looked set to continue yesterday after the explorer announced it had drilled a dry hole off the coast of Mozambique. But bargain hunters caused it to rebound and it was top of the blue-chip leaderboard, ahead 25p to 1,043p.
Back on the mid-cap index, packaging company DS Smith crumpled 2.5p to 267.5p when it warned that its extensive European operations still face "challenging" economic conditions although it said it is "on track" for a strong 2013.
The departure of the boss of telecom-testing equipment supplier Spirent Communications helped it up 6p to 134.6p. Retailer Dixons ticked up 2.68p to 44.18p ahead of its results on Thursday.
On Aim, video search engine Blinkx jumped 10p to 156p after two analysts got keen on the group. Citi raised its price target to 185p, while analysts at Jefferies said it plays in the "extravagant growth hot spot that is online video advertising" and is in "good shape" after it "transformed its business in 2011". They initiated coverage with a buy and a 190p price target.
Oil explorer Gulf Keystone Petroleum appointed another independent director to beef up new chairman Simon Murray's board. Gulf has hired Andrew Simon as a non-executive director and it was 1.25p better at 175.5p.
Solgold has started drilling a copper-gold site in Ecuador and it glistered 5p brighter to 15.13p.
SME adviser Braveheart Investment Group was 1p sharper at 13p after announcing it is back in profit.
Scancell, a specialist in immunotherapies for the treatment of cancer, was 1.25p healthier at 34.75p after it got the go-ahead for a patent for its DNA ImmunoBody technology in Australia.
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