[kokoko]

Originally Posted by ofoegbu

I am happy to have a discussion with you on Transcorp being a "money spinner" and why you have that view. However, since 2005 when this idea was first floated, I for one never, ever bought in to it and I told anyone who cared to listen then. And the reason is fairly simple - the world is moving away from the model on which the whole concept of Transcorp is built on. In today's world of increased specialisation, lean, mean and nimble organisations, business at the speed of thought etc- how can one company expect to create significant value to shareholder by doing business in industries as diverse and different as tourism, telecoms, movie, oil & gas, education, mining, etc - all at the same time and expect to do better that companies whose 24/7 concentration is in just one industry and sometimes in just one sector in an industry.

IMHO, I do not see how Transcorp can deliver more value to a shareholder than, say, MTN or even Starcomms from the telecoms industry. Ditto for Oando or Total in oil & gas, Ikeja Hotel Holdings in tourism - especially when these niche players have best-in-class management team and Transcorp cannot even keep a management team for 1 year! Look at GE in the US, Daewoo in Korea etc - people have been calling for such companies to be broken up and Daewoo has already been broken up. GE was trading at $24/25 in 2003. Five years later it is trading at $33, an approximately 40% growth over 5 years. Compare that with S&P 500 that has done 65% over the same period. In other words, people who own GE are taking on more risk (since S&P 500 is more diversed than GE) and getting less return! And this is despite the fact that Jack Welch spent years building GE management through one of the best management programs in the world. If you think the folks at Transcorp can even come close to replicating GE's performance, than I have a continent to sell to you!

That is my problem with the whole concept - companies should stay in one industry and create value in that industry and leave it up to the investors / shareholders to diversify their investments across industries. Anything else is a recipe for chaos...

Just my 2 kobo worth of opinon ...

There are great posts on this thread, and thanks especially to Ofoegbu for the 'back-of-the-envelope' valuation method.

With regards to Transcorp business model, I could not agree with him more that it is moribund. I am of the opinion that the constituent parts of Transcorp are worth more than the whole and I am prepared to eat my hat if this is not true. Transcorp management needs to give serious thoughts to un-bundling the monster; selling of NITEL and other rotten bits to focus on hotel services. The company also needs another name (Transcorp has been renamed "Transcorpse' by many contributors to this thread!) Selling off parts will generate extraordinary income that can be re-invested in its core business or declared as profit as they deem fit. The problem is I just don't think there are many investors out there who will even buy NITEL with stolen money.