Now’s stock price rises on fourth telco player ambition

By Marissa Mae M. Ramos
Researcher

INVESTORS took positions on Now Corp. following news of its affiliate’s collaboration with a Singapore-based firm for a nationwide fiber rollout, which is seen bolstering the company’s ambition to become the fourth major telecommunications player.

Data from the Philippine Stock Exchange showed the Velarde-led firm trading P1.18 billion worth of 308.646 million shares from Aug. 27 to 30, making it the ninth most actively traded stock last week.

On a week-on-week basis, its share price was up by 51.64% to P3.23 per share last Friday from its closing price of P2.13 on Aug. 23. Year to date, its share price is down 10.77%.

“The news that they’ll be [vying to be the] fourth telecommunications [player]… is the main news that drove the price higher,” said Aniceto K. Pangan, equity trader at Diversified Securities, Inc., in a mobile message.

In a disclosure to the local bourse last Monday, Now Corp. confirmed the collaboration between affiliate Now Telecom Co., Ltd. with HyalRoute Group, a Singapore-based firm that is a global provider of shared communications fiber network. HyalRoute is investing $1-2 billion to roll out a fiber optic cable network in the country through its local subsidiary Philippine Fiber Optic Cable Network Ltd. Inc.

The memorandum of understanding between the two parties would support Now Telecom’s bid in providing a “pure fiber-based broadband” service to its customers as well as addressing infrastructure demands of the company’s pivot towards 5G.

The partnership, along with Now Telecom’s renewed 25-year Congressional Franchise puts Now in a position to be the country’s fourth telecommunications provider, according to industry analysts.

“The company disclosed that they would be entering into a tie-up with the HyalRoute Group. Now Telecom secured a 25-year congressional franchise for the telecommunication service which [puts] it in a position to enter the market,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in an e-mail. “Aside from this, the company would be planning to be offering 5G services.”

To recall, Now was one of the candidates in the search for the country’s third telco service provider. The slot was given to Dito Telecommunity Corp., which is owned by Dennis A. Uy’s Udenna Corp. and Chelsea Logistics and Infrastructure Holdings Corp. and China’s China Telecommunications Corp.

Gregorio B. Honasan II, secretary of the Department of Information and Communications Technology (DICT), said that he would push for additional two players in the telco sector.

Despite market interest last week, analysts advised investors to be patient on Now.

“Both short- and long-term outlook are bearish based on a downward trend in earnings…,” Mr. Pangan said. The analyst also noted the company’s negative retained deficit, which stood at P426 million as of the first half.

Now Corp.’s net income attributable to parent plunged by 61.78% to P904,729 in the second quarter from P2.367 million in the same period last year.

“[Its stock price] will probably go back to its consolidation price of P2.05-2.15 per share until they are able to implement their plan successfully,” said Mr. Pangan.

For Mr. Limlingan, trading has been “rather volatile.” For the stock, he placed the 50-day moving average support at around P2.5 per share and resistance at P3.8 per share.

“The company is trading at a premium based on its multiple and when compared against other players in the market. However, should the company become a formidable player in the telco space, its price will reflect the long-term potential of the company.”