Elektrim issues shares, joins SiTech
Telecom and power conglomerate Elektrim socked investors with a double whammy last week. First it announced that it planned to issue up to 45 million new shares. On Friday, it finished the week by announcing it had joined the ranks of the Warsaw Stock Exchange's (WSE) SiTech and TechWIG Index.
Elektrim said last Monday that it planned to issue up to 45 million new shares to raise capital for its telecom and internet projects. The firm did not provide details about how the proceeds from the new share issue would be spent.
Elektrim said it would ask its stockholders to vote on the new share issue at the company's shareholders meeting on June 30. The company also said it would present an agenda for the meeting on June 22. The share issue will not have pre-emptive rights, which permit existing stockholders to purchase new shares before they are offered to other investors on the market. Half the new share issue would provide finances for the development of Elektrim's projects and acquisitions in telecommunications and the internet, while the rest would be issued as global depository receipts (GDRs) so the firm could be listed on European stock exchanges, according to a company statement.
Elektrim's new share offering would rake in an additional zl. 2 billion-zl. 2.5 billion ($454 million-$568 million) for the full 45 million shares, telecom analysts said. Elektrim has nearly 83.6 million shares outstanding. The new issue would be one of the largest secondary share offerings issued by a Polish company.
Without further details about the share issue, analysts could only speculate on the purpose of the additional capital.
"The basic question that remains without an answer is what will such huge funds be used for at the moment," said Andrzej Kasperek, an equity analyst who covers the telecom sector at Erste Securities Polska. "Everyone thinks it's Optimus."
Optimus is the parent company of Optimus Pascal, the subsidiary that operates Onet, the country's most popular web site.
After several news reports in the local press that Optimus was looking for a strategic partner and conducting talks with Elektrim, Elektrim acknowledged it was holding talks with the computer giant as well as with other potential partners for its internet project. Elektrim previously had not confirmed reports that it was interested in Optimus.
Kasperek, however, said that it would not make sense for Elektrim to buy the entire company since Optimus' real value was the subscriber base and content of Onet. He said Elektrim's IT holdings would supply additional content and software solutions for the firm's internet project. In April, the firm acquired five local IT and internet-related companies to develop Polish-language electronic commerce and other online services.
On the telecom side of its business, Elektrim will focus on its "Warsaw Project." The company plans to integrate the operations and infrastructures of its holdings to eventually offer both corporate and residential clients in the Warsaw region service packages that combine voice telephony, cable TV, internet access and data transmission, said Jacek Glinka, Elektrim's chief executive officer of fixed telephony.
Elektrim's telecom subsidiary El-Net holds a license to operate fixed-line service in the profitable Warsaw region. El-Net has offered fixed-line telephony services to corporate clients in the Warsaw area since March and currently has almost 500 corporate telephone lines installed in Warsaw offices, Glinka said. The company plans to roll out service to residents in September. In addition, Elektrim controls 51% of Poland's largest mobile operator, Polska Telefonia Cyfrowa (Era GSM), and the country's second-largest cable television provider, Aster City Cable.
To cap off the week, Elektrim announced that it joined the SiTech segment of the WSE, which currently clusters 14 Polish telecom and IT firms. The company was not included among the original 12 members when the SiTech segment was formed in April.
"The reason (for Elektrim's exclusion) was the fact that Elektrim was seen as a conglomerate and not as a pure telecommunications company," said Pawel Zach, senior research analyst at Citibank (Poland). "Now the stock exchange changed its opinion."
Elektrim will become part of the WSE's TechWIG index of high-tech and telecom stocks on June 19. The exchange started the index in May.
On Friday, Elektrim's share price closed at zl. 52.30.
