D'oh! Mind The Share Price Gap

Sydney Morning Herald

Tuesday March 13, 2007

Edited by Matt O'Sullivan xchange@smh.com.au

Ten Network stock took a hit yesterday, but it's still a bit pricey for the privateers.

SHARES in Ten Network took a tumble yesterday as Channel Bart was hit on two fronts.

A poor showing in the first month of ratings was compounded by more reports that its sale process is floundering.

While private equity firms such as Hellman & Friedman, Merrill Lynch Global and CCMP Capital Asia are reportedly interested in Ten at about $2.90 a share, the stock closed yesterday at $3.33 - a bit of a gap.

It has also emerged that contrary to recent reports, the Seven Network is not one of the bidders for CanWest's New Zealand operations MediaWorks.

With Fairfax Media out of the picture, that leaves PBL Media as the likely frontrunner.

Quiet on myhome front

Realestate.com.au has helpfully provided Xchange with traffic figures for property classifieds in the first 10 days of March.

And it seems PBL's new site, myhome.com.au, is struggling to get off the ground, failing to reach 100,000 unique visitors despite the recent marketing drive.

Realestate.com.au had 1.6 million unique visitors over the period, followed by Fairfax Media's Domain.com.au with 852,000, according to the data from Nielsen/NetRatings.

Realestate.com.au also notes that users stayed on its site an average 11 minutes, compared to just 2 minutes for myhome.com.au.

Mumbai calling

No matter that customers or staff hate it, the major Australian banks may have little alternative but to send more operations offshore as competition increases from international institutions.

Even call centres - which the Australians have declared as "no-go" zones - could be located in countries like India, according to Deloitte Touche Tohmatsu's 2007 Global Banking Industry Outlook.

That's certainly the trend in the US. Operational decisions across the Pacific have certainly influenced the arguments of our banks in justifying the need to shift back-office business overseas.

Information technology operations are an obvious choice and Deloitte has concluded that within three years 30 per cent - or about $US14 billion - of the $US44 billion spent by financial institutions globally on IT will be directed offshore, whether to solely owned subsidiaries or to third-party providers.

The reason is simple: half of the organisations that have shifted operations abroad have cut costs by at least 40 per cent.

Furthermore, the industry as a whole is likely to save $US16 billion in the near future by adopting the best practices of those that have gone offshore.

Which is exactly the belief of ANZ et al (except the Commonwealth, which reckons it can exploit the discomfort of its rivals by laying claim to the title of the Real Aussie Bank).

But given the political and consumer hostility that exists to sending operations like call centres abroad, it will be another thing altogether to get NAB, Westpac, St George and ANZ to sign up to Deloitte's view that offshoring has now become a "core competency" of their business.

Summit to ponder

Summit Resources has repeatedly called the timing of Paladin Resources' $1 billion scrip bid for the company "opportunistic".

Now Summit has released some drill results from one of its wholly owned Queensland uranium projects.

Summit's board has been urging shareholders to consider the promise of its portfolio apart from its Valhalla/Skal joint venture with Paladin as part of its rejection of the offer.

Yesterday, Summit said all of the holes it sunk into its Andersons deposit near Mt Isa had intersected uranium mineralised sediments consistent with previous drilling of the deposit. It is operating two drill rigs "around the clock", and expects to report a Joint Ore Reserves Committee-compliant resource for Andersons after it receives the assays from six more holes, expected within 10 days.

In a presentation last year, Summit indicated Andersons had a resource of 4400 tonnes of uranium but this figure is expected to be revised.

Summit shares closed 7c higher at $4.44 yesterday, while Paladin shares rose 11c to $8.80.

Nice to be back

After a busy week selling Telstra's story to investors in London and New York, boss Sol Trujillo has returned home to a bullish report card from some analysts.

Credit Suisse analysts are especially upbeat about Telstra's third-generation mobile phone network called Next G.

The broker believes the network - turned on several months ahead of schedule in October by Telstra amid much fanfare - is still not appreciated by the market.

"With a network that will not likely see coverage, depth or economics matched, we see significant upside in mobile for Telstra over the coming 12 to 24 months," analyst Justin Cameron said in a report.

Telstra's ordinary shares closed up 9c at $4.33 yesterday and the T3 instalment receipts rose 10c to $2.88.

Irish shown door

Babcock & Brown Capital is ringing the changes in the emerald isle.

The listed cashbox plans to axe 700 jobs - about 10 per cent of the workforce - at Ireland's No.2 telecommunications company, Eircom, over the next three years.

Babcock executive Rob Topfer has said the main focus for Eircom - in which the cashbox has a 57 per cent stake - will be to raise its share of the mobile market in Ireland from about 15 per cent to as much as 25 per cent within the next five years.

© 2007 Sydney Morning Herald

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