Wateen Struggles in Stocks

Wateen Telecom has failed to establish its footing in the local equity markets despite efforts to streamline its businesses and operations in the fields of broadband, telephony and media services.

Currently Wateen’s share value is Rs 2.05 per share (averaging Rs 2.25 per share) in the three stock exchanges.

The company, which floated its IPOs amid much hype and sensation, is struggling to attract investors after more than 75 percent of share value has been slashed in the share markets in just 14 months.

Wateen had floated its share of Rs. 10 in the equity market in April 2010, which gradually lost its demand and value in the market subsequently the services business could not flourished because of issues mainly concerning the management and the operations.

The operator introduced initial public offering (IPO) worth Rs 2 billion in Pakistan equity markets on April 20-21 in order to expand its infrastructure network and retirement of debt. It issued 110 million shares to institutional investors and general pubic amounting to Rs 1.1 billion with a green shoe option of 90 million ordinary shares to increase its paid up capital from Rs 4.174 billion to Rs 5.275 billion.

The company attracted investors initially as it was aggressively pursuing its multiple plans in all its services including wireless telephony, broadband and infrastructure services to strengthen financial position. Its corporate clients include leading financial institutions, cellular phone companies and television channels.

It was 82 percent oversubscribed from all categories of investors with total subscription received for Rs 2.006 billion as proceeds of over 200 million shares subscribed against the offered 110 million shares at a par value of Rs 10 (for Rs 1.1 billion). The additional green shoe option of 90 million shares (for Rs 900 million) got fully subscribed too; again at a par value of Rs 10 per share.

Farhan Bashir, an analyst at InvestCap Research, said that Wateen has not maintained its strong repute among the investors as a profitable entity of the telecom and broadband sector, hence, lost its value of share sharply within the year.

He said the broadband operators have witnessed growth in subscribers’ number but the revenues are still very low because of less utility usage of its customers and non-recovery of service charges.

Besides, the operating expenditures and maintenance charges are quite higher at technical level and administrative side to keep the company in the red for long period with no sign of betterment in near future, Bashir added.

The company acquired a good share in international calling traffic and it has been a leading performer in broadband and wireless local loops sectors. The subscribers’ base of WLL user stands at 226,955 by April-end as per statistic of PTA whereas it has lion share in the Wimax market.

Though the company’s IPO was pledged to underwrite by 14 leading banks of the country but they are reluctant to provide financial leverage to the operator that could stabilize its financial health and market position in the stock markets.

Wateen’s management has witnessed change of leadership and management, which is expected to improve its operations, businesses and financial status in the future.