YTL-E: Growth Over-Expected?

Although the price of YTL-E has more than double for the past 3 months in the expectation of YTL's WiMax roll-out this coming Nov 19th, little is known how they are going to reap the benefits of the roll-out.

But a recent announcement in Bursa Malaysia shed light on their financial relation to the WiMax business. The announcement was regarding selling their VOIP business under the name Extiva for RM18+ mil to YTL-Comm, a subsidiary of YTL-POWER directly involve in the rolling out of the WiMax network in Malaysia under the 'YES' brand.

While the announcement itself is informative on their intentions and the future growth of Extiva under YTL-Comm, what is more interesting and equally important in my opinion was the explanation of how WiMax business will affect YTL-E's bottom line. A quote from the announcement;

"The YTLe Group currently earns a fixed fee for the leasing of its WiMAX spectrum to YTL Comms and will also have the opportunity to share in future revenues once the 4G platform is launched and becomes operational."

I'm not sure whether the specifics are already out but YTL-E currently earning 'rent' from YTL-Comm and also the ability of earning 'future revenues' is somewhat an indication of profit sharing of the WiMax networks revenues. If "YES" were to be successful and some say at least a minimum of 300k subscriptions to be so, the possibility of earning a much larger and passive income is indeed very lucrative for YTL-E. If it is true the profits are shared, I'm just speculating here.

But at the moment, the share is trading at the current PER of 262x based on the last yearly EPS FYE2010, it's all about speculation now so no point pondering on the fundamentals. YTLe needs to earn in net profits up to RM460+ mil or 34.6 sens EPS just to push their PER down to the reasonable 20x. Which I doubt will ever happened in the near future for their WiMax venture. Their FYE 2010 full year EPS is less than 1 sen or 0.66 sen specifically, which is double their previous FYE2009 of 0.31 sen.