Colombia. The title of this note is a phrase by Luis Hernando Pulido, secretary of Sintrateléfonos. I wanted to start this note with it, after seeing that the company published the value of its shares after the valuation made by the investment bank J. P. Morgan and confirmed by BTG Pactual, who set the price per share at 671 pesos.
With an initial price of two billion pesos, the sale of the shares of the Telecommunications Company of Bogotá, ETB, which are held by the District, begins this month, since its shares total 86.35% (3,066 million shares), the base price of the ETB is $2.38 billion (1.19 times its book value), that is, each share has a minimum value of $671.
Official sources of the Mayor's Office indicated that to calculate this price, methodologies such as "Discounted Cash Flows" were used. With it it is possible to analyze the information of the company, its environment, this from its income, operating costs, the level of indebtedness and the possibilities of expansion with new investments, among other factors, which is summarized in the future sustainability of the same.
The process of shareholder disposal will consist of two stages and will begin in the second week of May. The first stage will remain in force for 60 days and will only involve employees, former employees and pensioners of the ETB, workers' unions, employee funds, cooperatives, mutual investment funds and pension and severance funds. Once this cycle is over, a second stage of disposal will be given way in which the other interested investors can already intervene.
At the beginning of the 2000s, the ETB was very profitable because it was a local monopoly at that time and in addition, the company sold a part of its shares to the private (11.6%) which strengthened it even more, this profitability decreases over the years due to the intense competition from other telecommunications companies that entered the city market, among other things.
It is worth mentioning that the Mayor's Office of Bogotá, the District University, the Aqueduct, the Fund for Economic Benefits, Severance and Pensions, the IDU and the Bogotá Lottery, together, own 88.3% of the remaining shares, (data from the year 2000), so these entities receive resources from the operation of the ETB and if the administration continues with its sale plan, these resources will no longer enter these entities.
Financially with the data revealed in 2015, it is known that the ETB has a net worth close to $3 trillion and assets ranging from $2.3 trillion to $3.7 trillion (depending on the accounting standard that applies). Its main assets are fiber optic plants and networks, which represent 75% of its properties. However, it is also a company with a debt that reaches $1.4 trillion and a burden in operating expenses totaling $1.3 trillion.
Among its main expenses are personnel (2,800 employees), which costs it $215 billion annually; maintenance and materials, $147 billion; its call center, $122 billion, and fees, for nearly $92 billion. Its presence in the local market is a minority, its activity has generated almost $ 2 billion of dividends from 2002 to 2015, not for that reason makes it a smaller company, to such an extent that other large companies in the sector such as Directv, Telefónica, Azteca and Tigo-UNE have expressed their interest in buying it.
For the contradictors of the sale, the ETB represents an enormous potential of the assets it owns, they consider that it is very strategic for the State to participate in telecommunications and that its income can meet the needs of present and future local administrations, the fact of having additional income different from taxes and transfers from the national government, provide a greater degree of stability for your development plans. Some also suggested that it is best to get a strategic partner for her.
For his part, Mayor Enrique Peñalosa recalled that the resources obtained with the sale of the ETB will be destined to social investment, in areas such as kindergartens, schools, works such as Ciudad de Cali Avenue, Boyacá, 68 and ALO, as well as hospitals and security.
The Development Plan contemplates investments of $90 billion between 2016 and 2020. I wonder if it is worth selling this company for only 2.38 billion, isn't it selling the goose that lays the golden eggs?, can those 2.38 billion not come out of a better administration, from attacking the scourge of corruption head-on, from being more proactive and efficient?... I leave this and slowly retreat.
