14 October 2004: Premier telecommunications company and ISP, DataPro Group Limited, is to become SA`s first AltX-listed telecommunications provider when it lists on Monday, 18 October 2004.
At an opening price of 55c per share, the company is going to market with a capitalisation of R125 million and a total number of 228 979 630 shares in issue.
Douglas Reed, managing director of DataPro, could not have chosen a better time to list as a telco. He points out: "The business raised capital at a forward price:earnings multiple of eight times and was 2.49 times over-subscribed on its private placement. This provides some indication of the appetite for risk in this market." He says DataPro is aiming to become one of the exchange`s "sexiest and alluring stocks" and anticipates taking advantage of an imminently booming telecommunications industry.
Noah Greenhill, manager of AltX, concurs: "The telco space is a very sexy one at present. The listing is perfectly timed due to the deregulation of their industry. Clearly AltX provides them with an ideal platform to leverage the opportunities presented to them. They have good management in place, a young, innovative team and are committed to growing their business in the AltX environment."
James Herbst, financial director of DataPro, says deregulation in the telecommunications industry prompts the question, "with a market that has increased 30-fold, which companies have the right platform with the right people who are quick and innovative enough to operate as one of the major competitors to Telkom?"
Herbst believes that another investment case is made when looking at the strategic value of DataPro compared with an existing telco. Herbst believes that if an existing telco were to acquire the company, a substantial portion of the annuity revenue would drop to the incumbent`s bottom line. It is unclear how much of DataPro`s forecast revenue of R113 million to August 2005 could drop to its bottom line, but says: "One thing is for sure, it would be substantially greater than what we forecast we could deliver."
Thirty percent of the shares in DataPro Group have been placed with empowerment companies. The largest shareholder is Vantage Capital Group, a black empowered private equity firm. It has 23% of the equity. Blitec, which also has a stake in ERP.com, saw its stake in DataPro diluted to about 3% and its black minorities` stake decrease to 4% after the issuing of new shares. This gives DataPro a much-needed boost in terms of its empowerment credential.
With regards the future, Reed states: "with the minister of communications` announcement of deregulation in the telecoms space, our carefully laid out projections, short-term strategies and budgets outlined in our prospectus were turned 180-degrees. Three days and many strategic sessions later, our excitement was uncontainable. The immediate implication to DataPro is a market that will increase 30-fold."
"We want to retain our independence for as long as possible, grow organically as well as by acquisition and roll-out our own wireless infrastructure to self-provision our own services," Reed said. "Our goal is to become the AltX star, an alternative telco stock and a very exciting growth stock."
DataPro marks the first new listing on AltX for designated adviser Arcay Corporate Services. "We assisted DataPro in raising R48 million ahead of listing, the largest placement to date for AltX. The placing was very well received by both retail and institutional investors. DataPro is a quality listing with an excellent management team and exciting prospects," comments Arcay Corporate Services director Michelle Krastanov.
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