Dubai TV network OSN’s valuation surges 72% ahead of planned IPO

The valuation by the brokerage Arqaam Capital in a research note, places the pay-TV network among the biggest media firms in the region.

OSN had 734,000 subscribers at the end of 2012 of which almost a third were in the United Arab Emirates. Jaime Puebla / The National

Dubai-based Orbit Showtime Network (OSN) is worth US$4.3 billion, according to a new valuation by Arqaam Capital.

The brokerage said the new figure represents a 72 per cent increase following OSN’s acquisition of Pehla Media & Entertainment.

Separately, OSN yesterday secured a $200m financing facility.

Arqaam’s valuation, in a research note, places the pay-TV network among the biggest media companies in the region ahead of a planned initial public offering.

“We raise our value of OSN to $4.3bn after continuous strong momentum with very high operating leverage. We expect OSN’s new acquisition of Pehla to add a further 10 per cent to its current levels,” said Jaap Meijer, an analyst at Arqaam. “We expect the potential IPO of OSN and the improved divisional disclosure will unlock the hidden value embedded in the pay-TV operations.”

In June this year, Kuwait Projects Company (Kipco), which owns a 60.5 per cent stake in OSN, announced that it had hired Rothschild to advise on the IPO. A time for the offering has yet to be announced and it remains unclear where the company would list.

“There are no plans confirmed regarding an IPO. We will announce any further details at the appropriate time and subject to approvals from all concerned stakeholders,” said Hamad Malik, the chief marketing officer at OSN.

Separately, OSN secured a $200 million, five-year syndicated loan facility with Mashreq that will be used to further the company’s expansion in the region. Mashreq acted as the sole lead arranger, bookrunner and underwriter for the facility, which was “heavily oversubscribed”.

“OSN has a strong market potential and strong potential for growth, which we are keen to leverage to add long-term value for our stakeholders. The funding facility secured from Mashreq Bank will enable OSN to pursue further growth,” added Mr Malik.

After acquiring Pehla’s 40 channels that broadcast content including Bollywood movies and premium cricket channels, OSN’s number of channels has reached 140. This year it launched seven new channels and the company made its first foray into the international market by launching Ya Hala in the UK. It is now focusing on Qatar and Libya for further regional expansion.

Last year, OSN had a 30 per cent increase in subscribers – reaching 734,000 households across the region, 29 per cent of them in the UAE. Arqaam said OSN’s revenues grew 24 per cent and its subscriber base grew 22 per cent during the first nine months of this year.

“The pay-TV industry in the Mena region is fast-growing and has enormous growth potential,” said David Butorac, OSN’s chief executive. “Given the changing preferences of television and audiences who value premium and exclusive content that OSN is consistently focused on delivering, this potential is becoming increasingly tangible.”

According to the consultancy Arab Advisors Group, OSN is the leader in the region’s pay-TV sector. It competes with Al Jazeera Sports, Abu Dhabi Sports and Al Majd.

“Despite the promotions of Pay TV operators, most of the Arab world remained tuned to free-to-air [FTA] satellite TV channels. Economically, many viewers seem to favour the free content of FTA channels rather than paying for TV content,” said Hiba Al Atiyat, a research analyst at Arab Advisors.