Softbank, Elektrim post gains on internet
The market set a new all-time high last Wednesday at 21,742 points, driven by continued investor enthusiasm in tech, media and telecom stocks. But poor macro news caused most other sectors to experience price decreases, analysts said.
The all-share WIG index inched up 0.1% on the previous week's record high, closing Friday at 21,245.4 points. But volume soared 34.25% to finish the week at zl. 1.82 billion ($443.9 million).
"We ended the week more or less at the same level as the week before," said Pawel Puchalski, an analyst at Dom Inwestycyjny BRE Banku. But "everyone knows that information technology (IT) companies are keeping the market on a higher level because almost all other companies noticed losses."
News that inflation for the month of January hit 10% and that the Monetary Policy Council (RPP) is considering hiking interest rates 100 basis points caused a lull in blue-chip stocks last week, Puchalski said. To this end, Polski Koncern Naftowy (PKN) dropped 8.4% and Bank Pekao fell 3.07% respectively to finish Friday at zl. 24 and zl. 60.
However, Optimus showed the most dramatic rise of all IT stocks, soaring 32.53% to close Friday at zl. 193.5 per share, despite the announcement that the company's net profit plummeted 90.4% last year to zl. 2.5 million ($641,026). "Nobody's looking at the current fundamentals," said Rafal Gebicki, an analyst at Raiffeisen Capital & Investment Polska. Instead, investors are focusing on the benefits internet projects will bring in the next few years, he said.
Reflecting worldwide trends, the telecom sector, hardware manufacturers and software companies are delving into the lucrative internet services market. All want to get a jump start on becoming one of the handful of four or five companies that eventually will dominate the country's internet service provider (ISP) market. "It's the most profitable niche of the telecommunications business," Gebicki said. "It's impossible not to offer internet services."
Indicative of the trend, telecom and power conglomerate Elektrim announced last week that the firm will introduce its Elektrim.com portal by the end of the year. "We want to offer as wide as possible a package of services, and of course, this includes internet services," said Ewa Bojar, Elektrim's spokeswoman.
Elektrim is considering two options for entering the internet market: creating its own platform or cooperating with more experienced companies in creating Elektrim.com. The company will probably cooperate with another ISP, since a collaboration would "cut costs and save time," Gebicki said. He added that bidders for Elektrim's internet plans include Telekomunikacja Polska (TPSA), ComputerLand and Optimus. All those companies are among the "seven or eight potential big bidders" who would likely spend $100 million on the project.
Considering the wave of consolidation in the internet sector and a saturated marketplace of service providers, it is unlikely that a company would start anew. With the market for internet services full, many are forced to team up with other companies or carve out niche services.
Softbank is a case in point. The banking software provider intends to have a go at the profitable internet service sector as well. Softbank, however, is taking a different road into cyberspace. Instead of creating its own portal, the company is contemplating purchasing shares in existing ISPs, namely Multinet, PiK-Net and Polbox.
Softbank closed Friday at zl. 275, up 21.15% on the week, while Elektrim rose 14.92% to finish at zl. 57.
