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UWL, Uniti Group Limted
nipper
post Posted: Sep 8 2020, 01:11 PM
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In Reply To: nipper's post @ Aug 24 2020, 11:54 AM

the transformation that FY20 was aimed to be is not complete... The bid for OptiComm OPC at $5.20 has been beaten by a Super Fund coming in at $5.85.

..So, OPC up 10% and UWL down 10% ($1.28 now)



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Aug 24 2020, 11:54 AM
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QUOTE
FY20 was wholly transformational for Uniti, having completed three substantial acquisitions in the first half, namely LBNCo, OPENetworks and 1300 Australia, each of which therefore contributed to Uniti’s FY20 earnings for part of the year.

The organic growth achieved in the second half of FY20 by the now substantially enlarged Uniti business, combined with an effective integration program, resulted in the Company upgrading its underlying EBITDA0 guidance for the second half of FY20 and its forecast June 2020 underlying EBITDA runrate on three separate occasions, twice in February and again in June.


Uniti finished FY20 with an annualised underlying EBITDA exit runrate of approximately $41M, a 24% increase in the second half of FY20 on the same measure as at December 2019, generated entirely organically.

Very pleasingly, Uniti continued to convert operating earnings into free cash flow with Net Operating Cash Flow in Q4 FY20 of $10.1M providing Uniti with the ability to fund any growth capital expenditure out of operating cash flow. Capex as a percentage of underlying EBITDA for FY20 was 31%, and for Q4 of FY20 was 38%.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Aug 18 2020, 12:06 PM
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Posts: 7,517
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Small cap darlings' merger challenge
QUOTE
Each time telco entrepreneur Vaughan Bowen fronts institutional investors, he can usually count on one question: what will you do differently this time around?
Bowen is well known to investors after founding M2 Communications, a company that delivered strong returns for investors, mainly by growing through scrip fuelled acquisitions, until it ultimately merged with Vocus deal that quickly went sour.
That regular question is particularly pressing right now as Bowen's $790 million Uniti Group, which lays fibre in new developments and then charges internet providers access to the networks, finalises its cash deal to buy Opticomm, a smaller $500 million rival that has gradually been moving into Uniti's space of laying fibre to apartments and high rise buildings rather than its traditional housing estates market.

It's a deal that both critics and supporters say is right on form for Bowen, a Uniti executive director.

The critics see it as proof that he's a deal junkie, who knows how to ride a hot market and ask how long the run can last.

His supporters say he has a track record of creating value through acquisitions in the telecommunications space by identifying trends ahead of the pack and this is bang on target.

Uniti Group listed in 2019, attracting plenty of backing from institutional small cap investors, after its management was replaced by Bowen and Mick Simmons, who had also worked with Bowen at M2.

The investors liked the segment, and hoped the new team would repeat their earlier success.

Uniti has delivered ... its share price has risen from 18¢ back in February 2019 to closer to $1.60. Opticomm has been a similar success ... it also listed in 2019, and its shares have grown from $2 a share to $5.20, largely through organic growth.

So how does Bowen answer that persistent question?

He tells investors that he is more focused on integration. It's undoubtedly the right answer, as it was the integration with M2 and Vocus Group that turned things sour. But it will be put to the test with the Opticomm deal, which is Uniti's biggest acquisition to date and has a distinctly different culture.

Bowen, who declined to be interviewed, is right alongside the investors with this Opticomm deal ... he bought $3.7 million worth of shares in the latest Uniti capital raising to fund its Opticomm deal.

Like M2, Uniti has grown through acquisitions, funded by regular capital raisings.

Last May, it raised $15 million at $1 a share to buy inbound voice services business Call Dynamics. By August, it had agreed a $100 million deal to buy private fibre networks company LBNCo and raised another $100 million at $1.20 a share to help fund it.

In October it acquired OPENetworks for $27.5 million in cash and shares and raised another $85 million to buy 1300 Holdings Pty Ltd, which owns priority phone numbers and is affiliated with Telstra, in December. That raising was at $1.62 a share.

The Opticomm deal – for which the company has raised $270 million – is its biggest yet, and is expected to catapult this small cap favourite into the S&P/ASX200, a move that tends to bring index buying along with it.

Uniti has been in talks with Opticomm, a company that has had equally impressive growth from IPO – though it has relied on organic growth, rather than acquisitions – for more than a year, sources said.

But Opticomm finally agreed to a deal as COVID-19 hit, negotiating a cash deal without any face-to-face meetings, including the due diligence phase.

COVID is regularly offered up as the reason that Opticom's board was willing to strike a deal on little premium and not scrip based, although there are options for investors to take some scrip.

Others see it as a sign the board was happy to take the money and run.

Much of Uniti's register owns shares in Opticomm ... roughly 30 per cent ... and those investors were prioritised in the latest Uniti capital raising, in order for them to increase their scrip holding if they chose, in some cases by selling down shares in Opticomm. There are plenty of reasons that investors like the deal, including that it will limit the two players moving in on the other's territory.

It is effectively them and the NBN... and they were both [Opticomm and Uniti] starting to compete a little bit more head to head, which had the potential to impact returns," says Tribeca Investment Partners portfolio manager Simon Brown.

"This was manifesting itself in developer contributions with some price pressure in green field agreements and multi-apartment market, where in some cases contributions had been cut to zero.

Ultimately, Brown says, the real focus should be on customer activation and utilisation, rather than developer contributions which were not the core earnings base.

Opticomm and Uniti both provide an alternative to the NBN .... and, while they don't offer Telstra or Optus on their platforms, they do provide more than a standard NBN option. They can provide developers with pay TV so there's no need for dishes, lay out Wifi stations around new developments and other options, often at no extra cost.

One of the bigger concerns is whether a COVID-19 recession will impact housing development and slow new builds.

There were some early concerns about this, that have now abated to a degree. Another factor that is soothing investors is the gap between the combined business' connected and activated lots. In other words, the houses that have been built but not connected, either because they are still under construction or the owners have opted not to get broadband yet.

Reporting season updates from developers will be an important data point.

It's a significant number because the increase in activated units is where the earnings come from, the per month fee per household. It makes money by charging internet providers to access the networks and the customers, and by providing support and maintenance services to the networks.

The combined group will have 109,500 active connections, and an additional 78,000 connected premises. Then there's another 188,000 contracted lots ... the ones that could be considered at risk if either developments slow or developers go under, though both companies say they work with the major players.

This deal will deliver the scale for both in other areas apart from connections. For example, using one another's facilities. Opticomm has a new control centre in Melbourne, and that can roll through the Uniti systems, reducing capital expenditure. There's also been talk about stranded assets in Queensland the new group might buy together.

There are smaller issues as well, including weaning both groups off China's Huawei ... referred to in the scheme documents as the country of origin issues relating to network equipment. It is a process that has already begun, and one that does not really concern investors who point out there are plenty of rival offerings.

Ultimately, the big challenge is putting the two businesses together. The acquisition is due to complete in September.

After that, the real work integrating the two businesses will begin.


https://www.afr.com/companies/telecommunica...20200812-p55kzk



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
 



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