Dragovan Milicevic, an economic analyst and a former Serbian Trade Ministry official, says that Kopernikus cable provider is worth 37.5 million euro, and not 200 million euro, which is how much Telekom Serbia paid for its acquisition.
Milicevic also said that the real value of the cable provider was 4.5 billion dinars or 37.5 million euro. He said the estimate is based on financial reports, trends on the telecommunications market and practice in similar take-overs in other countries.
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According to Milicevic, the estimation of Kopernikus’ value is based on a similar model defined by the world’s leading expert in the evaluation of companies, Aswat Damodaran, a professor at the New York Stern University. The value of this type of company is based on market growth rates, business risks, capital expenditures and planned growth rates.
If we compare Kopernikus to 21 similar companies in Europe, we can see that its value is far below the 200 million euro, as reported by Telekom Serbia.
According to data from telecommunications regulatory bodies, Serbia’s overall cable market was worth 264.7 million euro last year. Milicevic said that trends and earnings forecasts for the next 10 years show that Kopernikus is worth 37.5 million Euros.
According to RATEL data for Serbia, in 2017, there were 1.48 million subscribers of cable broadband Internet and 1.7 million subscribers of media content and their number is growing at around three per cent a year. The market growth potential is the decisive factor in the general growth and company growth, and this depends on the population’s income, the living standard and the number of users.
“Unfortunately, Serbia has not been recording positive trends in any segments. Namely, the population’s income has been stagnating, the number of inhabitants has been dropping at the speed of almost 90,000-100,000 a year, with around 50,000 moving out of the country every year, and the number of deaths in 2017 was almost 40,000 higher than the number of births. The number of households is also reduced, as can be seen from the number of ground telephony connections,” explains Milicevic.
According to the anticipated cash flow trends, i.e. the earning capacity of the company in the next 10 years, Milicevic says that the present value of Kopernikus is about 4.5 billion dinars or 37.5 million euro.
“If we consider the value / EBITDA ratio (EBITDA – earnings before interest, taxes, depreciation and amortization) of Kopernikus, it stands at 5.69 (if the value is 37.5 million euro), and for the group of similar companies, it is 6.25. If we take into account the third indicator, the value of the company and business profit (EBIT – earnings before interest and taxes) for similar companies, it stands at 11.27, and in the case of Kopernikus, it is 13.37. There is no economic reason for this transaction,” concludes Milicevic.
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