NEUTRAL TANDEM INC IQNT
May 01, 2013 - 12:05pm EST by
pat110
2013 2014
Price: 4.50 EPS $0.00 $0.00
Shares Out. (in M): 33 P/E 0.0x 0.0x
Market Cap (in $M): 146 P/FCF 0.0x 3.0x
Net Debt (in $M): -87 EBIT 0 0
TEV ($): 59 TEV/EBIT 0.0x 0.0x

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  • Asset Sale
  • excess cash
  • Telecommunications

Description

 

This will be a very quick write up since the timing here may be critical given today’s news. 

Neutral Tandem, Inc., doing business as Inteliquent, provides voice, Internet protocol (IP) transit, and Ethernet telecommunications services primarily on a wholesale basis in the United States and internationally. The company provides its services using an all-IP network, which enables to deliver global connectivity for various media, including voice, data, and video. It offers voice services that allow carriers to exchange local and long distance traffic between their networks without using an incumbent local exchange carrier?s tandem or establishing direct connections; IP transit services, which allow Internet traffic to cross or transit between its customers to the Internet; and Ethernet services between various points of presence. The company serves competitive carriers, including wireless, wireline, cable, and broadband telephony companies; Internet connectivity and Ethernet services carriers; service providers; and content providers.

Today’s News

Neutral Tandem, Inc. d/b/a Inteliquent (NASDAQ: IQNT) announced today that it has sold its global data services business to GTT (OTCQB: GTLT) for $54.5 million. The transaction consideration includes $52.5 million of cash and $2.0 million of commercial services that GTT will provide to Inteliquent over three years. The transaction signed and closed on April 30, 2013.

The global data business sold by Inteliquent generated revenues of $69.5 million in 2012 and serves over 1,100 customers. The data business has over 120 points of presence in 24 countries and provides IP Transit and Ethernet services. The data business is one of the largest global Ethernet interconnection networks, a top-five global IP Transit service provider and a leading IPv6 network. The data business is largely comprised of the assets acquired by Inteliquent through its purchase of Tinet S.p.A. in 2010.

Ed Evans, Chief Executive Officer of Inteliquent, stated, "We are pleased to conclude the sale of our data business. We look forward to working to grow our core voice services business, to which we will dedicate all of our efforts going forward. This transaction also affords us with significant balance sheet flexibility to consider other value-enhancing alternatives for our shareholders."

Richard D. Calder Jr., President and Chief Executive Officer of GTT, stated, "Acquiring the Inteliquent data business accelerates our established growth curve towards becoming a more asset-based network solution provider, capable of delivering complex, integrated network solutions globally."

 

Valuation

 

Price:   $4.50

Shares: 32.5

 

Market Cap:      $146

Cash                  $ 33

Proceeds Sale    $ 54

Data Business

EV Less Cash   $59

 

2013 EBITA Guidance $35 to $40

2013 Free Cash Guidance $20

 

EBITDA Mult: 1.5

Free Cash %    33%

 

INTQ has a recent history of returning excess cash to shareholders.   The data business sold generated very little to any EBITDA.   I don’t believe there will be any tax on sale because they paid more than sale price for this business a couple years ago.  I need check that though.   New management is running this business right, cutting costs, refocusing and has been friendly to shareholders.  

More detail can be developed through Q and A. 

I do not hold a position of employment, directorship, or consultancy with the issuer.
I and/or others I advise hold a material investment in the issuer's securities.

Catalyst

 Market fully absorbs news
 
Return excess cash to shareholders
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