viewTelit Communications PLC

Telit Communications appoints Sapfi Kapital MD as non-exec


Telit Communications (LON:TCM, PINK:TTCNF) announced the appointment of Alexander Sator as a non-executive director after Massimo Testa resigned as non-executive to focus on other activities.

Sator is the managing director of Sapfi Kapital Management GmbH, which owns 7.2% of the issued share capital of Telit.

Sator was a co-founder of one of the first software companies in Germany in 1983. He then founded Sator Laser in 1996, which focused on the development of lasers and laser systems for industrial applications.

In 2001 Domino Printing Services took a stake in this business and in 2005 Sator sold his remaining shares.

Last month, the machine to machine (M2M) communications specialist reported that revenues in the first nine months of 2010 have grown more that 60% over the same period a year earlier to around US$98 million.

Also in October, Astaire Securities, now known as Northland Capital, said that with its share of design wins ahead of its current market share, Telit should continue to grow faster than a market forecast of a compound annual growth rate of 16.7% over the next five years.

"Some profit-taking on the back of a share price re-rating leaves Telit trading on 8.4x FY11, well below the UK sector average as well as recent sector consolidation that support a share level of c.95p/share," the broker said.

Northland also commented on the appointment of Sator today, saying the move makes “considerable sense” as Telit looks to extend its offering from pure M2M module sales into network services that offer high margins and recurring revenues.

These additional revenues are not included in Northland’s forecasts for the company as yet.

The largest M2M customers will be able to deal direct with network operators but the bulk of Telit’s customers are SMEs (small and medium enterprises), said the broker.

“The module provider represents a logical point of aggregation and Telit has already signed partnership agreements with France Telecom, Deutsche Telekom and Telenor,” said Northland.

Sator has been strategy advisor to Deutsche Telekom AG for the mobile business over the past two years.

Northland also noted that Sator has a “strong M2M pedigree” as a previous director of Cinterion Wireless Modules.

The broker again asserted that the growth trajectory and multiples paid for competitors pointed to a “very comfortable” price level of about 95 pence.

Shares in the company last traded at 64 pence.

Quick facts: Telit Communications PLC

Price: 128 GBX

Market: AIM
Market Cap: £169.84 m

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