Download Starcomms explains share price drop as Qubain becomes advisory

Starcomms explains share price drop as Qubain becomes
advisory member
A Code Division Multiple Access (CDMA) operator in Nigeria,
Starcomms has linked the fall in its share price value to excessive
market forces and conditions of the business environment in the
country.
Specifically, they argued that the share price fell because the demand
has not been fair, stressing that the volume of trading of recent has
become extremely thin.
According to Maher Qubain, the former Chief Executive Officer, who
moved to the advisory board of the company, said there has been a lot
of demand for the Starcomms share, but stressed that the market has
not been there for it, adding that the lull in the capital market of late
had not only affected shares of Starcomms but other listed stocks on
the capital market.
Qubain said, “In December 2010, the company had announced $81.4
million tower sales. Looking at the share price of 50k multiply by seven
billion outstanding shares, the value of the company, the market
capitalisation is below $22 million. How can a deal of 70 per cent of
your asset worth $81.4 million, when an entire company has over 1.7
million active customers and a positive EBIDO of over $8 billion at the
end of 2010 be worth $22 million on the street.
“So it is really unfair to ask us. I am not an NSE specialist and I would
equally say that I don’t expect any of us here to be able to give a
precise answer to that. We don’t really know why and how the prices
are been determined and decided in the market. I can tell you vividly
that our debt profile has reduced because, we use the tower proceed
to solve that. We settled almost $70 million worth of debt. So
company like Starcomms that owes like $165 million last year, today
owes less than $110 million. So our debt profile has reduced
significantly, also operational cost reduced drastically and with our
data services growing year-on-year by 27 per cent, the question now
is why has the share price remains at 50k. I don’t think, it has to do
with us, but the operations on the stock exchange.
“So that some companies are folding up in the CDMA market has
nothing to do with the technology. It is about the management of the
business and that of the competition from the GSM operators is a
separate issue. But from the market point of view, I ask you why are
we at 50k from over N13. Because, the towers alone, if you translate
into million dollars, it is equal to N2.25k. So if for the towers alone,
without the customers, no other business, no 22 states, 31 cities and
others, we should be up there in the capital market”, he stated.
On the change in position, the Board Chairman, Chief Maan Lababidi in
a statement said, “The Company will be losing the services of Maher
Qubain. Maher joined the company in 2002 with just 2500 subscribers
and four base stations. Since then the company has grown into a
national telecommunications operator with a presence in 22 states, 31
cities, 175 towns and over 900 base stations and 1.6 million active
subscribers
“The board of Starcomms Plc. has simultaneously announced the
appointment of Logan Pather as Acting CEO and MD, Logan joined
Starcomms in February 2011 in the capacity of Chief Operating Officer.
“While we will be very sad to see Qubain leave his role as CEO/MD, we
are very fortunate to have someone of the caliber of Pather assumed
the Acting CEO position.”
By Adeyemi Adepetun
GUARDIAN July 13, 2011