Transcorp Valaution

I had a read of Transcorp's prospectus posted on Vitiva's website and must say I'm delighted with the asset base uderwriting their IPO.

The purchase of of 51% of Nitel along is worth the value of shares on offer, for US$500 Billion in naira. Apparently, new managers were brought in to help with restructuring, the same to MTEL the mobile side of Nitel.

Generally, telecommunications in Nigeria is still at an early stage with enormous potential for double figure growth, MTEL have a good chance of growing MTEL's market share further.

We could easily ask, is MTEL worth the One Billion Dollar price tag? To answer my own question - Yes. I would look at a valuation method of at least 25 times forward earnings which, major mobile providers where roughly values at when debuted on European and US bourses.

So the question is, can MTEL achieve an annual earning of 600 naira per user even in on a conservative user base of 4 million users over the next decade? I definitely think so.

In Nigeria even with MTEL co-exiting with the other mobile providers like CELTEL and MTN,there is plenty more growth to be acheieved

Over the next decade mobile and data usage will grow in market size and consumption providing earning potential for even the weakest of providers.

Obviously, there are question as to the issue of Nigeria's risk profile and how best Transcorp's managers sweat the assets they have but this will become known over time and time is what I have.

Transcorp's prospectus list numerous proposed business forays, the viability of these streams or even the survival of such businesses is an unknown quantity but what is transparent to me is the recognition by Transcorp's and their bankers of the huge potential in businesses currently suffering from under-capitalisation and neglect.

Take movie production and studio facilities, Nigerian movies are sought world-wide but we consumers are aware of the the makeshift studio and scare post-production services but still buy regardless!

Hopely, this will make Nollywood a more desirable product, the fact that Transcorp have the capital and clout to fund better facilities and movies, industry-wide product quality will improve as a result raising the bar.

As I've said I will be buying some shares for myself, if not at the IPO maybe in the aftermarket but Transcorp is going be part of my retirement fund!