18th October 2007 : Leadcom voted "AIM International Company of the Year for 2007"




Main Web Site : http://www.leadcom-is.com/

Investor Relations Email : investorsinfo@leadcom-is.com

The webcast stated an update on the capabilities trial in less than 5 weeks, lets hope they have a contract waiting to be signed on completion to start the India ball rolling. Looks like the JV in India is 99% owned by Leadcom, so no reduction, in LEAD terms, of profits it generates. Based on that 5 week comment we should be news w/c 11th Sept, if not before.



http://uk.biz.yahoo.com/14082006/214/leadcom-enjoys-strong-first-half.html


Monday August 14, 11:20 AM

Leadcom enjoys strong first half

LONDON (ShareCast) - Telecom services provider Leadcom continued higher today after it reported a strong performance at the interim stage and said the outlook for the second half of 2006 is positive.

Net profit for the six months to 30 June was (Advertisement)

1% better than a year ago at $4.05m on revenue 32% higher at $61.76m. Normalized pre-tax profit, before expenses in respect of share options, was up 35% to $6.56m.

Revenues achieved in the Central American-Latin America, and Europe, Middle East and Africa regions and India, which comprise 84% of the group's total revenues, were up 44% on a year earlier.

Israeli revenues fell slightly due to the company's focus on higher margin opportunities.

The group expects growth trends experienced in the first half to continue, with its current order book, frame agreements and pipeline of opportunities for 2007 giving it good visibility.

Leadcom also said it is in discussions with its vendor partners regarding the expansion of already existing cooperation in India.

In addition, it is in the process of a capabilities demonstration trial and is confident that a successful completion of the trial phase will be followed by a "sizeable" amount of business performed in India during 2007.

"Management is comfortable with current market expectations and expects to record 2006 as the fourth consecutive year of a 40% level of year-on-year growth, improving profitability margins in areas of current operations, and penetrating new territories and countries," said the group.

As ever, anything from India is upside :)

http://www.leadcom-is.com/admin/literatureSubCat/Filesdownload/CS_H1_2006_August_06.pdf

From HB's Broker Round Up:

Altium Securities ....., has a buy rating and 105p target for Leadcom (LEAD.L)

Yes silvermede :

Altium reiterate BUY and 105p target today :


22-Aug-06
Leadcom Integrated Solutions LEAD

Altium Capital Buy 53.00p

Target - 105.00p - Reiteration

21st August Note :

http://www.leadcom-is.com/admin/literatureSubCat/Filesdownload/Altium_Post_H1_2006.pdf

25th August 06

http://www.business-standard.com/compindustry/storypage.php?leftnm=1&subLeft=1&chklogin=N&autono=102695&tab=r

Airtel signs $1 billion deal with Ericsson

Our Economy Bureau / New Delhi August 25, 2006

Bharti Airtel today announced that it has entered into a three-year service contract with Ericsson for an estimated $ 1 billion for design, planning, supply and installation commissioning of its networks in 15 circles.

The contract will enable Bharti Airtel to expand its mobile services footprint and reach out to all towns and cities in 15 telecom circles.

The contract also includes supply of next generation equipment like Media Gateway and MSC Server that will enable Bharti Airtel for an all-IP network, a company release said.

The deal will also enable Bharti Airtel to reduce the operational costs and introduce new services in a cost-efficient way, it added.

The two companies had entered into the countrys first manage service contract in 2004 for $ 400 million to manage services like network, base station centres and switching centres, which was extended in 2005 for $250 million, a company spokesperson said.

The 15 circles are: Delhi, Haryana, Punjab, Himachal Pradesh, UP (West), Andhra Pradesh, Tamil Nadu, Chennai, Karnataka, Kerala, Rajasthan, UP (East), Jammu and Kashmir, Assam and North East.

Manoj Kohli, president, Bharti Airtel said, Our partnership with Ericsson will allow us to focus on delivering better customer experience even as we leverage the world class expertise of our partners to roll out our networks across all census towns by March 2007. In addition, we are also sourcing next generation products that will allow us to deliver innovative products and services to our customers.

This partnership will enable Airtel to channel its resources and expertise to its core areas of product innovation, value added services, marketing, branding and pricing, while simultaneously providing world class mobile services by leveraging Ericssons world class expertise in network management.

Papalpower,

Is that 1billion US$? And, from having included this comment, are we to assume Leadcom have, or are about to have a slice of this pie? If so do we have an estimate of how much?

Lostandfound, yes it is a billion US dollars, and Leadcom could be in line for some of it. Whilst I would guess in the region of tens of millions of potential revenue for LEAD from this, it might be more in the long term. The bigger multi-billion BSNL deal is due for award in the coming weeks, its expected Nokia/Siemens will get the major slice of that one.

India is a massive growth market, and Leadcom are right in there........just a case of waiting.

A good post by MG at AFN :



Masurenguy - 26 Aug'06 - 09:56 - 1907 of 1908

PP - Given Leadcoms historical relationship with Ericsson, they could potentially fulfill a meaningful subcontracter role on the Airtel deal. If this proves to be the case then this could be the first important piece of Indian business to be gained.

Since the main Airtel contract has now been publicly awarded, I wonder whether the 'Capabilities Trial' (that Leadcom referred to at the Interims) relates to the Airtel deal, particularly since it was hinted that some announcement may be made in September prior to the completion of this trial ! I just wonder who they have to demonstrate their 'capabilities' too. One has to assume that it must be to the main client since Ericsson already have plenty of prior knowledge and experience of Leadcoms capabilities.

The biggest deal in the pipeline is still the BSNL contract which could be worth anything from $2.5bn to $4bn. It looks as though the Nokia/Siemens JV could be front runners for a major slice of that. I would have thought that there must be some public announcements relating to this during September or October.

"The companys current principal focus is India, where up to ten mobile operators are rolling out networks and signing up subscribers at the rate of 5m - 6m per month. We estimate that this is likely to create a demand for up to 100,000 towers over the next two years. At up to $60K per site this equates to $6bn in roll out revenue. Even if Leadcom can capture a small share of this it represents a significant opportunity"
Altium Note 21/08/06

"Liberalisation of the Telecoms market in India is leading to some 5m new mobile subscribers per month, and there is every prospect, once a platform has been established, for annualised sales to move beyond $50m in coming years. Whilst gross margins on Leadcom business are around 28% we would expect lower margins in India given the substantially higher volume of potential work"
Corporate Synergy Note 30/06/06

If Leadcom can climb aboard the BSNL deal, as a prime subcontractor, then it could represent a significant leap forward both in terms of the size of the company and in the scope and credibility of its business. Don't forget the reference, in the recent webcast, to the initial discussions with a significant US partner relating to a major roll out program that is scheduled next year. That could represent a further important slice of new business for 2007.

Any positive developments in India can only serve to enhance Leadcoms reputation as a credible international service player in the Telecoms market, which can only help them to achieve further new business from major roll outs in other markets.

http://in.tech.yahoo.com/060824/137/66x9h.html

Ericsson bags $1 bln order from Bharti By Reuters
Thursday August 24, 08:05 PM
By Niklas Pollard and Shailendra Bhatnagar

STOCKHOLM/NEW DELHI (Reuters) - Telecom equipment maker Ericsson won a contract worth an estimated $1 billion to expand and upgrade Bharti Airtel's telecoms network, the two companies said on Thursday.

The deal powered shares in Bharti, India's most valuable telecoms firm with a market value of $16.5 billion, to close 2.4 percent higher at 415.3 rupees in a firm Mumbai market.

Ericsson shares rose 1.76 percent to 23.10 Swedish crowns in Stockholm.

India, the world's fastest growing wireless services market that is adding nearly 5 million new users a month, has become a hotspot for global telecoms equipment giants like Motorola Inc. and Nokia.

Indian carriers such as Bharti, CDMA-operator Reliance Communications Ltd. and state-run Bharat Sanchar Nigam Ltd. have annual expansion plans exceeding $1 billion each.

"The three-year services agreement will see Ericsson manage design, development and deployment of Bharti's network, including capacity and coverage, enabling the operator to expand in rural India and reach out to all towns and cities in 15 regions," Ericsson said in a statement.

Bharti, amongst the pioneers of mobile services in India, will raise resources internally to fund the order, company officials said.

"This contract will take care of all our roll-out needs in these 15 circles for the next three years," Manoj Kohli, president for mobility at Bharti, told Reuters.

Ericsson has an existing relationship with New Delhi-based Bharti, which had more than 24 million GSM mobile users at the end of July. That number is growing by more than 1.2 million a month in a 108 million strong market, which substantially exceeds the combined population of Germany and Sweden.

LONG STANDING RELATIONSHIP

In February 2004, Bharti and Ericsson had signed a three-year contract worth more than $400 million, and followed up with a $250 million deal in June 2005.

Ericsson was optimistic of grabbing more orders from Bharti, which is 30.84 percent owned by Singapore Telecommunications Ltd. and nearly 10 percent by Vodafone Group Plc.

"It is clear that this deal shows that our products are good and it is promising when the biggest operator in India chooses us for such a big roll out." Mats Granryd, Ericsson's head of operations in India, said.

"This is one of the biggest deals which have been done in India. The contract is for three years, but I am convinced that we will continue to deliver to Bharti even after that."

[b]Ericsson is also one of the 5 bidders shortlisted for a GSM tender worth $4.8 billion floated by BSNL, the top Indian telecoms firm by sales.[/b]

Ericsson said it would also upgrade Bharti's network with its mobile softswitch system, which will allow the carrier to move toward a low-cost Internet Protocol platform.

The Stockholm-based telecommunications equipment provider already manages more than 70 percent of Bharti Airtel's GSM/GPRS network in 15 of the 23 regions making up India's telecommunications sector.

The top three players - Bharti, Reliance Communications and BSNL - are furiously expanding networks in communication-starved rural areas where more than two-thirds of India's billion-plus people live.

There is room for sustained boom as penetration rates of mobile services are just 11 percent in India - amongst the lowest in fast-growing economies. The cheapest call rates anywhere, of less than 2-3 U.S. cents a minute, also help.

Bharti has a presence in more than 4,200 towns and thousands of villages. The firm plans to extend networks to all census 5,200 towns by March 2007.

Copy of post on AFN, in summary LEAD now has cash in the bank to the tune of 10m US$, are paying full tax rates, and in a couple of weeks should announce that the Indian Compatability Trials are complete, which opens the doors to the Indian potential and new contracts.

An exciting period of time ahead, the more high growth to come.



PapalPower - 2 Sep'06 - 18:05 - 1949 of 1950


yump, I would disagree somewhat.

Firstly, there is still 10m US$ in the bank, which may or may not go towards a US acquisition to boost earnings. Therefore, strip out the cash, and the P/E is higher.

Secondly, a large part of that money has gone on the set up in India, so although you may class it as dilutive this year, it has the potential to double present forecast earnings for 2007.

Do not forget, many people are crowing over companies low P/E ratios, BUT totally ignore their debt status. As for Leadcom where you can "strip out the cash" from the SP to show a much lower PER ratio, you have to allow for the debt on the companies that have debt.

Companies are not valued on earnings alone, take a look around the AIM market and look at the many non-profitable companies. They are valued on "what might be".

Presently with Leadcom its valued at under market average PER for what its presently doing, and is growing at a very high rate, is debt free and with cash in the bank.

If you value the companies soley on P/E, then you should knock billions off of the London stock market, as there are many many companies that have not got a P/E ratio as they are unable to make profits at all.

The potential that could come in for India literally has the ability to double next years earnings.

The question, do you want to be in a debt free company, with cash in the bank, thats on a low pr PER that could soon be halved.

Or do you want to play with P/E ratios on debt laden companies ?

Again, to say there is not growth this year is not true at all ! This year Leadcom are paying the full 30% tax rate........therefore it is not the dilution that has knocked your P/E ratio totally, the biggest lump is the increase in tax to the full rate.

So, your forecasts are now at full tax rate, for a debt free company, with cash in the bank.

Now look at those "wonder" PER companies.....have they got debt ? have they still got to pay higher taxes in the years to come ? Likely answer is yes to both.

Thats the good thing with Leadcom now, and great what they have done this year, to increase tax up to the full 30% and to raise money for expansion, but to keep earnings per share the same (or slightly improved over last year) means they have put in great growth !

This from the August Altium note, we should have 2 piece of news this month, first being Indian Capabilty Trial news, and then the trading update end of Sept. One would hope for a third somewhere in the middle of a contract win.


'We remain of the view that Leadcom's current valuation does not reflect (A) the company's track record of consistantly delivering against or beating estimates or(B) its potential for maintaining that growth on the back of continued mobile penetration increases in emerging markets. Following the recent share price weakness, the stock is trading at 8.5x 2007E fully diluted, post option p/e, an EV/EBITDA of 4.6% and a yield of over 3.0%. We look forward to the trading update at the end of September for further visibility on India and year end forecasts'.

Some people have got the wrong end of the stick regarding the management bonus for Leadcom, so here is a copy of my post at AFN to clear this up :


"Anyway, lets discuss it. Firstly, bonus schemes have to be looked at with the director salary and expenses as well. Some companies pay massive salary and tiny bonus, others low salary and expense and high bonus.

Back to your points, you have SERIOUSLY misundersood what was said...is it deliberate ? I must ask.

The bonus scheme is for any PBT from 0 million to 10.75 million there is NO BONUS.

If the PBT is between 10.75m and 13m then they get 21.6% of the difference betweeen 10m and the amount of PBT reported (MAXIMUM would be 21.6% of 2.25m (13m-10.75m).

If the PBT is over 13m then they get 32.4% of the difference between 13m and the PBT reported level.

In 2005 Leadcom reported 9.174m US$ PBT.

The 2006 thresholds take into account the amount of percentage increase to get bonuses. An increase of 9.174m to 13m is good going would you not say. They have to produce an increase to 10.75m to get any bonus.

So lets say there is a 50% increase in PBT this year, WOW, thats good is it not, 50% increase in PBT when some struggle to get a 5% increase...LOL

So PBT increases to 13.761m US$ with a whopping 50% increase in PBT year on year, then the management of Leadcom would get :

0 to 10.75m US$ = No bonus = 0 = nada
10.75m to 13m = 2.25m x 21.6% = 486,000 US$
13m to 13.761 = 0.761m x 32.4% = 246,000 US$

Therefore total bonus for putting in 50% growth in PBT from 2005 to 2006 = 732,000 US$.


Should Leadcom give an unbelievable 100% growth in PBT levels, from 9.174m to 18.348m then the bonus would be :

0 to 10.75m US$ = No bonus = 0 = nada
10.75m to 13m = 2.25m x 21.6% = 486,000 US$
13m to 18.348 = 5.348m x 32.4% = 1.732m US$

So if Leadcom give 100% growth in PBT from 2005 to 2006 they would have a bonus of 2.218m US$.......and for that kind of growth, THEY DESERVE IT !!!"

From a post on AFN :

"there is a small write-up in the ic about lead, being well undervalued. its under the israeli companies feature".

Maybe someone can shed some further light on the contents of the article.

Thanks to a another poster, here is a small extract of this weeks IC article....


""Leadcom is a telecoms group that looks unreasonably cheap, bearing in mind that its decent profit margin of 10.5 per cent produced profits last year of $9.17m. It is a highly specialist provider of 'network deployment services' to large, global mobile-phone networks - based around the CARE product range - and it boasts a record order book of $80m and cash of $7.53m, yet its market cap is a lowly 50m " "

Today's RNS:

Leadcom Announces New Wins in the EMEA Region

September 12, 2006 - Leadcom Integrated Solutions Ltd. ('Leadcom' or 'the
Company'), (AIM: LEAD), a leading international provider of innovative
telecommunication solutions, is pleased to announce its latest wins in the EMEA
region.

Leadcom was selected by a leading equipment vendor to supply services and
products on a new project in West Africa. This new win goes hand in hand with
Leadcom's strategy of strengthening and expanding its cooperation and
partnership with leading equipment vendors.

In addition, Leadcom has been awarded follow-up network expansion contracts by
several pan-African operators in Ghana, Gabon, the Democratic Republic of Congo
and Tanzania.

Leadcom's subsidiary in Bulgaria has signed a 2 year frame agreement with one
of the GSM operators in that country to supply civil network infrastructure. In
addition, Leadcom was invited to support one of the worldwide leading vendors
with its superior network planning services in Bulgaria.

The aggregate value of these contracts exceeds US$12 million, part of which
will be recognized in 2006, with the majority adding to Leadcom's already
significant order book for 2007

The Company's breadth of expertise positions Leadcom favorably with its
customers and strategic partners. These wins demonstrate again the strength of
Leadcom's proposition to the markets and its ability to execute and leverage on
its strategy.

According to Mr. Ofer Ahiraz, GM of the EMEA Region, these contracts are likely
to be followed by extensions in both scope and volume.

The Company anticipates releasing a Trading Update for the three months ending
September 30 2006 around the end of September 2006.

The 2 x 200k sells were almost certainly buys as the bid / offer was 51/53 at the time of the trades, minor point I know but there you go.
2517

Good news.

2517, the large buys were all mid price, and all buys, as sell would have pushed it down.

It looks like perhaps some of the overhang has been lifted off, lets hope so.

From HBs Broker Round Up:

Altium .....has buy recommendation for Leadcom (LEAD.L) ...

105p target price as well for Altium on LEAD.