Friday, October 24, 2008

Stresswatch - 24th October

The world is taking another step into deep doo-doo today (as I write, the EuroSTOXX 50 is down 8%, having been down much more earlier in the day). It's a broad canvas of nastiness we're facing, but let's stick to the misery of our own beloved sector, just to retain our sanity.

Any Spanish real estate agents hoping to retrain as cable technicians will want to think again, as ONO has announced that it is to cut its workforce by up to 30%, citing the economic situation. However, I recall the company stating last year that its level of dependence on new housing development was low - perhaps there is a genuine erosion in the existing customer base. If there are any mega-uber value readers in Spain who can shed some light on ONO's current state, let me know. Certainly the bonds seem to be pricing in nearly the worst - back in the summer before I got iced, they were trading in the high 60s/low 70s - now they're in the 30s. 

Elsewhere, it turns out I was wrong here, when I predicted that Novator would be quitting its Netia investment. To the contrary, Novator has bought more over the past month - with the company sitting on cash and currently trading at 3.3x 2009 EV/EBITDA, it's a nice level to average down.

Meanwhile, Vonage has pulled a rabbit out the hat.

Our asymptotic chart of the day belongs to leading Greek altnet/DTH operator Forthnet, whose main shareholders have also recently averaged down again after an epic slide. If there were ever a market in need of a roll-up, it's Greece, and someone will no doubt step up to the challenge eventually - though even after the share price plunge, the company is still trading on 8.0x next year's EBITDA.  

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