M2 Group (MTU) Telecommunications offers various products and services
M2 Group (MTU) Telecommunications offers various products and services. M2 does not own its own telecommunications infrastructure, instead buying airtime off wholesale providers. The business model is capital light without the need for excessive annual expenditure to maintain infrastructure. M2 is beholden to prices set by wholesale providers, however with three sizable suppliers in the Australian market, there seems to be enough competition to enable M2 access to inexpensive telecommunication rates. Management re-iterated guidance in May, with expected NPAT to be $85-$95m for FY14. With a market capitalisation of $1.8 billion this puts M2 on a PE of between 11.3 - 12.5x's. This is well below the market PE average and is well below its peers. In the event M2 only hit the lower end of guidance, this would still result in a 27% return on equity. See full article in our monthly newsletter available here: (VIEW LINK)