Bucking the recent downturn in the global economy, telecommunications specialist TeleMasters has announced another two acquisitions, picking up the least-cost routing (LCR) bases of OneCommunications and Office Digital for an undisclosed sum. Headline earnings per share is projected to increase by 17.35% (based on the latest reported figures for third quarter 2008) as result of the acquisitions, while TeleMasters' asset value is forecast to increase by 6.19%.
The cash flush company continues to do good business and deliver strong returns to shareholders, thanks to a keen eye for maximising any opportunities to sharpen its market presence.
“We believe the local telecommunications market is ready for choice,” says Mario Pretorius, TeleMasters executive chairman. “Given the monopoly context we come from, the ability to offer meaningful choice across the telecommunications space will be key for all players moving forward. It certainly has been so for TeleMasters. Our acquisition of OneCommunications and Office Digital's LCR bases takes place within this context.”
Aside from the OneCommunications and OfficeDigital acquisitions, TeleMasters has also restructured its sales force, adding 30% to its team of sales managers. The company is also developing a new business model to manage sales in light of the recent global financial crash.
“The effects of the crash are already evident across the world, and we believe they will be around for some time locally. Our new model allows us to manage the range of impacts on dealers and on business clients,” explains Pretorius. “We've also expanded our technical team by 25% and launched the use of a new range of digital equipment to provide 24/7 monitoring and to 'future-proof' clients against the implementation of new types of GSM connections. These steps are all designed to ensure we maintain the positive trajectory we've enjoyed since listing.”
Almost entirely debt free, TeleMasters has been aggressive in its approach to shareholder value and its overall market position since listing on the AltX in March 2007. The company continues to offer great value at a reported 15.4% dividend yield, and was the first player on the JSE to seek to offer monthly dividends to shareholders. Ultimately, due to regulatory constraints, Pretorius and his team settled on quarterly dividend payments.
“We seek to deliver true value to shareholders,” says Pretorius. “That means paying regular dividends, and that ability in turn relies on prudent management in terms of operational muscle, market presence and acquisitions. I believe our track record speaks for itself - TeleMasters remains lean and well positioned to operate successfully over the long term, regardless of any shifts in the trading context.”
In its July 2008 interim results announcement, TeleMasters' revenue was up 19%, before tax profit up 18%, after tax profit up 9%, gross profit was up 5% and EPS up 8.7% to 19.57c per share.
“The key for us is market presence and penetration,” concludes Pretorius. “Since listing we've grown significantly as a company through selected acquisitions and well articulated programmes designed to strengthen the power of our operational core. Really this is the best news for investors - that TeleMasters is focused on continuing to deliver over the long term.”
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