The People's Operator Is Overvalued

The listing valued the company at £100m and Mr Wales told Questor he has ambitious plans to grow into a global giant. That forecast is dependent on a successful expansion into the United States which is planned for the spring. An agreement has already been signed with American telecom giant Sprint.

TPO is a mobile virtual network operator (mvno) that sells sim cards on its website and piggybacks on EE’s mobile infrastructure. The company said yesterday it had about 14,000 subscribers at the end of last year, more than double the 5,800 it had six months earlier.

By comparison the mvno business of Phones 4U that had about 85,000 subscribers was recently bought by EE for around £5m. This was admittedly a distressed sale out of administration and the Phones 4U business wasn’t growing as quickly, but on Questor’s rough estimates using subscriber numbers then TPO is worth less than £1m, or 1.3p per share.

House broker finnCap disagrees and given the rapid growth profile has placed a 250p target price on the shares as it expects revenue of £98m and pre-tax profits of £17.1m by the end of 2016. Questor is not convinced. Avoid.


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Source : http://www.telegraph.co.uk/finance/markets/questor/11340823/The-Peoples-Operator-is-overvalued.html

The People's Operator is overvalued
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