What would JTC be worth?

Jordan's government is planning to sell a chunk of the country's telecomms operator, but how much would Jordan Telecom be worth?

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By  David Ingham Published  June 22, 2002

The Jordanian government, which holds 60% of Jordan Telecom (JTC), has confirmed that it wants to sell some of its stake in the PTT on the Jordanian stock market. An international investment bank is expected to be appointed soon as the underwriter, although official sources are silent on how much of the company might be sold.

Alternative investment banking sources in the country tell ITP.net that the government will sell off up to 15% of the whole company, a quarter of its stake. One source also mentions a possible price per share of JD2.5 and says that the flotation will value the company at less than France Telecom and Arab Bank did when they paid $508 million for a 40% stake a couple of years ago.

From that, ITP.net decided to do a few sums in order to work out what JTC might be worth. First up, we took JTC’s financial year 2000 profit of JD59.6 million and divided it by year 2000’s earning’s per share figure of JD0.238. From that, we learned that JTC has around 250,420,168 shares.

The next stage was to multiply that figure by JD2.5 per share to come up with a potential market value of JD626,050,420. With the Jordanian Dinar currently standing at a value of US $1.42, that makes Jordan Telecom worth US $888,991,596.

That figure assumes, of course, that JTC would be sold off at JD2.5 per share, a very reasonable PE ratio of 10.5. Remember, however, that France Telecom valued the company at US $1.25 billion when it paid $500 million for a 40% stake, and the Jordanian government is believed to be valuing JTC now at a lower price. In that light, a figure of around US $900 million could be a realistic valuation.

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