Omnia Network begins IPO
Italy’s CRM outsourcer Omnia Network earlier this week began its IPO on the Star segment of the Milan Stock Exchange. It is reported that Omnia Network will float 9 million shares (plus Greenshoe) – 6 million newly issued and 3 million from existing shareholders – at a price between euro 5 and euro 6.5 per share. This is slightly surprising as former shareholders sold their shares at euro 2.6 in mid-2006.
The subscription period will end on the 22 February. During its first nine months 2006, Omnia Network reported revenues at euro 177 million, EBITDA at euro 12.53 million, and EBIT at euro 10.02 million, with respective margins at 7.1% and 5.7%.
Comment: What can we expect from the first IPO from an Italian call centre player? Simply put, Omnia is raising capital to support its growth strategy (both organically and through acquisitions), international expansion as well as product and service differentiation. As for the latter point the company delivers services through its four business units, namely Multimedia Contact Centre (47.8% of revenues), Logistics and Transport (25.1% of revenues), Facility Management (32%) and System Integration (4%), which compete on different markets but coordinate for joint offerings. A primary target of the IPO is the acquisition of 40% of UniPosta, the company that aims to become the main rival to Poste Italiane once the Postal sector is fully liberalized in 2009 – indeed Omnia’s offering (especially the logistics branch) may be fully embedded in UniPosta, and being a new market (some analysts value it at euro 4 billion) could be a great driver for growth.
Such a diverse business model is a differentiation in itself, as it allows fully-integrated customer management. This carries risks – all units need to aim for a low cost strategy – but that’s unlikely here, therefore Omnia needs to focus on quality of service.
Furthermore, client loss is a serious risk to Omnia Network. It currently has an impressive client portfolio featuring H3G, Vodafone, Istituto Poligrafico Zecca dello Stato, Ing Lease, and Mediaset’s R.T.I. These major clients represent 36% of consolidated revenues. Contract cancellations could have a heavy impact on the company’s health.
In addition to the possible loss of clients that it may face, we see further problems for Omnia: shrinking margins on prepaid phone and Digital TV transactions. Omnia Network provides these services to Vodafone and Mediaset, respectively. Labour costs on outbound contracts are expected to grow due to provisions made by Italy’s Ministry of Labour – but this will affect all the players in the game. Finally, the company must solve its cashflow issues, which are reportedly due to delays in payments. Despite the business risks, it seems that its growth strategy has potential, hence the optimism in Omnia Network’s IPO.
