Question 1

How did the telecommunications sector perform financially this month?

Accepted Answer

The sector showed operational resilience, with TPG reporting a 1HFY19 EBITDA of $424.4 million and confirming it remains on track to meet FY19 guidance. Despite a lower volume of announced transactions compared to February, major players like Telstra and Spark New Zealand successfully executed capital raisings to strengthen their balance sheets.

Question 2

What is the current climate for tech-focused capital raisings and divestments?

Accepted Answer

Activity is concentrated in high-growth infrastructure and software, evidenced by Megaport completing a $50 million share placement at $4.00 per share. Large-scale divestments are also occurring, notably the ASX selling its $382 million stake in IRESS at a price of $11.95 per share.

Question 3

What does the recent Lyft IPO signal about tech valuations?

Accepted Answer

There is a significant disconnect between market pricing and fundamental valuation models, with Lyft's $24 billion market entry exceeding analyst estimates of $16 billion. While the company currently captures 27% of gross billings, long-term EBITDA margins are forecasted to stabilize at 15% following shifts in driver dynamics.

Question 4

Is the M&A market for Australian software companies still active?

Accepted Answer

Consolidation remains a key theme as KKR continues its acquisition of MYOB at $3.40 per share. This activity persists alongside significant capital raisings from other tech leaders like Appen, Wisetech Global, and Zip, indicating a robust appetite for scaling digital platforms.

Monthly Australian TMT Wrap: March 2019

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