Whilst 76 percent of executives surveyed believed the market undervalues their company's shares, 50 percent of investors and 71 percent of analysts believe telecom companies are reporting the bare minimum of information. However, investors and analysts believe telcos could increase their share values, access to capital and management credibility by" improving their corporate disclosure".
The information needed to close that gap are non-financial value drivers such as customer numbers, market share, market growth strategies, infrastructure and technology, PricewaterhouseCoopers (PwC) partner Nick Ridehalgh told ZDNet Australia. -The more informative telcos are about that area of business, the more likelihood there is of moving company value upwards," Ridehalgh said.
-...investors and analysts are telling us they would value telecom companies more highly if they had access to better information. This means there is a clear opportunity for telecom executives to improve the value of their company by bridging this information gap."
Ridehalgh puts the lack of transparency in external reporting down to two factors -- the first being a CFO perception gap of what information is important in increasing company valuation. Also, the highly competitive nature of the telcom environment means they're concerned with giving away sensitive information in disclosing specifics in such non-financial areas.
Ridehalgh said the external reporting of Australian telcos was in no worse a state than their overseas peers, saying -it's somewhat better here than in some other countries". Furthermore, there is evidence, he said, of executives beginning to better inform the market.
-I think we're starting to see it happen in a number of countries around the world," Lisa Stewart, leader of the PricewaterhouseCoopers ValueReporting practice for Asia Pacific told ZDNet Australia.
-It's in the company's best interest to provide that information in the first place, otherwise they'll [investors and analysts] try to find the information out somewhere else," or make assumptions, she added.
Ridehalgh agreed that we are already beginning to see better telecom disclosure. -I think in Australia many telcos, certainly the major ones, are providing more information in these value-add areas on their Web sites," he said, including legislative and regulatory information.
According to Ridehalgh, it all comes down to what information the market needs to drive up the value of companies, and the evolution of reporting frameworks to provide such information.
Thirty seven major telcos worldwide, including a representational sample from Asia Pacific, were involved in the PwC survey.
