Friday, April 13, 2007

Avoiding the speculators

Access Kenya has done everything in the book to make sure that the poor kim, onyi and chebet do not share the internet pie. first they came up with the Qualified institutional investors idea which was reliably shot down by the regulator, now they have surely locked out the guys by stating that you need at least 50,000 to participate in their success. you will recall that in the past people have needed as little as 1000 shillings only to participate, firms have ended up with millions of shareholders which is a nightmare when it comes to AGMs, reports shipping and the like. also share prices oscillate very fast due to speculation and sheer ignorance. thirdly they have been rather quiet about the listing, no major noises like in the case of kengen and even eveready. it gives one the feeling that access kenya has already been bought. further, curiously, AK has given a very short period for the purchase of its shares.

however looking at AK as it is, it provides a very good buy really. first , the number of shares available are quite low meaning that shortage will bite even months after listing. given its a technology firm, i expect the firm to do quite well after raising required capital. in fact, AK would be the firm to give safaricom a run for its money if they roll out their ip phones well. am told that when you go to AK you get your line and walk away with it while at safaricom, the postpaid line takes quite a while to get approval. further as the economy grows, demand of the internet and other communication and media channels will increase, normally these firms get paid per use. they have very little in terms of raw materials.

18 comments:

  1. As a private firm, AK have the right to limit shareholder costs...

    In the future, all firms should be allowed to provide reports on the web (note that the Company Act or CMA/NSE rules in Kenya require expensive "hard" copies!) to cut costs.

    AGMs should be webcast (most shareholders don't ask questions... so this option can work...

    Of course, this will take a few years... we don't even have electronic trading!

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  2. Btw, where are people getting all these figures about how well AK will do? The company made PAT of 94m in 2006 from a base of 25m in 2004. That should say no dividend for at 3 years and investors should be looking at capital growth instead.

    Agree that when private firms float, they should be able to call the shorts in terms of number of shreholders they want.

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  3. Sawa, if AK feels sweet, if the buy is good, we'll meet on the secondary mart. But it seems they don't want to deal with 100k pple at AGMs, so targeting corporates and fund managers.
    As for giving Safcom a run for their money, I always figure that IP is the 4G of mobile telephony, but the fact remains that Safcom's ever expanding rural coverage means that for one to call your people, or for your people to call you, you'll be forced to stay on the monopoly, esp now with mpesa slowly picking steam, and the mingi offers that the company keeps throwing at sups ie. ngurumas and bongas...

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  4. Odegle, I'm yet to rate AK as a hot cake especially the minimum of 50k and am sure maximum allocation for indivioduals won't exceed 300 shares (going by history) and Kenya Re is slated for May 21st and by then refunds (for AK) may not have been done. I would therefore hold onto my cash and apply for more of Kenya Re and get AK once its starts trading.
    BTW Odegle, could you declare whats in your stable?

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  5. @coldi, yu have lofty ideas. web based statements,Web cast AGMs ...!
    @MainaT, my speculation as far as its doing well is concerned is based on the industry. telecommunications industry is doing perfectly well these days and more people will be looking at prices. with convergence, it would make more sense to acquire a yello phone than a mobile phone. am also looking at what they have achieved with little resources over such a short period of time

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  6. @mwasjd, am not sure how much safaricom is making from the rural areas. there is that thing called high networth, low cost clients. am told that safaricom's line 100 is these days impossible because of many new rural based customers who sometimes call to ask such things as how to dial a mobile phone.
    Again mwasjd, have you heard about the war between vodafone and T-mobile? for me something rings a bell rather loudly.

    @jaks, am not sure what criteria you normally use to rate issues but for me am looking at the future of this firm. if safaricom does not kill it immediately then its going to be a thorn in the flesh. and given that there are only 80 million shares on offer, you can imagine the shortage add to the fact that they will be the only industry in their category ... the list is endless! there is nothing more exciting than growing with a firm. you get it cheap.

    declare ,my stable mmmmm i have been wondering whether it was necessary, but now that you ask, i will.

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  8. Odegle,AK can only be viewed as a monopoly among the listed, its facing stiff competition from over 25 other firms led by the big boys such as UUNET, Africaonline, Wananchi. The market is large and and all will depend on innovation anmd lower costs. I thought he 800 Million is to go to the current shareholders and not expansion.
    Am eagerly waiting to see your stable!!

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  9. Tough call. You have to sympathise with the company when they look at how Eveready ended up with 100,000 shareholders who it will have to mail 60 shilling dividend cheques to! With the bull market, they should be able to reach the 1,000 shareholder mark, though like with Mumias, it could be a close call to achieve full subscription

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  10. what the possibility that Ak is accumulating a war chest for mergers and acquisition - the markets seems to be ripe for that

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