Sunday, September 23, 2012

Is Instacom worth it OR another mediocre ACE?

I can say that I am happy to see companies (as I had some prior engagement with them) like Instacom and OCK have successfully gone to the ACE market, the second through a direct listing while Instacom had done a reverse takeover of I-Power. To me, I-Power (don't bother analyzing) is already a company which will find it tough to move forward, hence letting go while sharing some bits of another company's success should be the way to go. Otherwise, our ACE market would be a joke with a long list of failed companies.

However, my praise would have stopped here as it is difficult for me to move forward with saying nice things except for that I am happy. Why? If my blog is about value investing with good, strong companies - the industries that Instacom and OCK are in really makes me think. Telecommunication is a great industry - but as I have said before, only for TM, Maxis, Celcom and Digi - fullstop.

Before we really think hard and try to find a gem of a telco based business, see below.

Look at the ones which I have boxed up in Red. To me, these companies are finding it hard to do business as they are being squeezed in terms of margin by the Telcos, while continuing to finance them - indirectly.

What does Instacom do for a living? It is an engineering cum construction company - doing things that successful telcos do not want to do - i.e. the dirty jobs - you may say doing dirty jobs should be profitable - hardly until now especially your clients are telcos.

So if you ask me, should I-Power allows itself to be RTO-d by Instacom? Yes. Should we invest into Instacom? Wait a second, and think. See if the below companies are successful and used as a benchmark for your investments? If not, take a pass and just be happy that there's life after I-Power.

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