Wateen and IPO: Insight

Wateen Telecom is easily one of largest WiMAX service providers in the world, offers LDI connectivity, holds 10,000 KMs long haul fiber optic throughout Pakistan, FTTH, satellite-internet, interconnection agreements with leading international telecom operators and what not?

One may agree that Wateen didn’t get a sparkling go in terms of WiMAX services, maybe due to an early start to counter the news that Mobilink is launching, however, today it has bunch of retail and wholesale services and probably the only network that can challenge PTCL.

Today Wateen has 12,000 broadband customers over fiber with 2,700 corporate links including 26 out of 31 commercial banks, 8 media companies, 13 telcos & carrier companies. Wateen processes over 1 billion minutes per year including direct LDI routes / interconnects with major incumbents i.e. Etisalat, STC, BT, MOC Kuwait etc.

On retail side, Wateen had to face several network issues due to technology constraint and a fact that it was deploying world’s first and largest commercial WiMAX network. Despite all this, company managed to gain 150,000 customers (claimed by internal reports), and probably un-beatable wireless broadband prices due to unmetered bandwidth on its WiMAX offerings. Wateen covers 22 cities for its WiMAX broadband, backed by 984 towers in total.

During the course, Wateen faced managerial and financial crisis as well. It had to lay off well over 500 employees last year for right sizing and to cut the operating cost. People like Tariq Qureshi, Javed Malik (now COO of Cybernet), Nadim Dogar now VP at Infotech, Athar Abbas- now CEO of a company in USA, left early.

Late last year we heard about Wateen in talks with foreign operators for partial sell out, however, deal didn’t go through for many reasons, price being one of them.

In October we heard Tariq Malik, CEO Wateen saying that company has decided to go for Initial Public Offering. At same time, Wateen recovered considerably huge payable amounts from domestic and international clients. That was time when Wateen revived from cash in hand problem, in fact it announced bonuses for employees.

Company kept working on IPO options and ultimately decided to go public with 110 million shares for institutes with greenshoe option of 90 million shares for general public. With total of 200 million shares at Rs. 10 per share, Wateen planned to raise PKR 2 billion.

IPOs usually happen to pay debts of yester years or to cash out. In Wateen’s case, they will achieve both the goals. Wateen is going to pay PKR 1.469 billion debt that it had acquired from commercial banks for network expansion. While another PKR 490 million will be paid to acquire company’s subsidiary ‘Wateen Solutions’ (formerly known as National Engineers (Pvt) Limited).

It merits mentioning here that Wateen currently holds 50.99 shares of Wateen Solutions, while 49 percent shares are owned by Mr. Jehangir Ahmed.

Post IPO

Wateen’s IPO is showing good signs as of now. Company’s 19.8 million shares were sold with-in first two days, while company CEO said that strategic investors, banks and different investment houses have already under written the 110 million shares, therefore, there would be no question of under subscription of the company’s issue.

Share prices that started from Rs. 10 per share are hopping around and over Rs. 11 mark.

As mentioned earlier, another 90 million shares would be offered to the general public and small investor in comparatively smaller lots of 500, 1000, 3000 and 5000 shares from 20th and 21st April 2010.

If, the IPO goes through, which apparently it will, Wateen has a network that can challenge PTCL.

Project Ranim Confidential Management Presentation 19th March 2008

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Tech reporter with over 10 years of experience, founder of ProPakistani.PK

  • What is the expected share price for Wateen in open market? Rs 20 or higher? What is the P/E ratio for PTCL?

    • Wateen EPS (Earning per share) is 4.88
      I believe the opening rate in Karachi Stock Exchange will be at somwhere between 18-25. Fair value of its share is 10 and I think there is no premium involved.

  • Wateen’s vision for IPO at http://wateen.com/AboutUs.aspx says:

    To introduce Wateen Telecom in the European and North American markets and provide the leading telecommunications international voice services through a world-class cutting-edge network to deliver a broad range of reliable, affordable and quality customer-centric services.

    However, your news says that the IPO is for paying back bank debt and to acquire National Engineers.

    So is Wateen lieing in its vision for the IPO that this capital is for expansion into North America and Europe? You cant enter western markets with a capital of $20 million (PKR 2 billion) only. Will share price drop to around Rs. 4 like worldcall after the omantel acquisition?

  • I am a recent victim of their pathetic customer service and bureaucratic red-tapism. I wonder why people will put in their money in a company that does not appear to grow in long-term. on the other hand our investors always follow the band-wagon (more appropraitely ‘Bheer Chaal’) rather than any rational analysis


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