Wall Street valuations of cellular telephone operating companies have soared in the wake of British Telecommunications Plc’s pricey investment in McCaw Cellular Communications Inc, so that although when we first raised the issue with regard to Racal Electronics Plc back in August 1987, the then valuation of Vodafone on the US basis meant that it was worth more than the market capitalisation of the entire group, since flotation of Racal Telecommunications Plc, the same discrepancy still exists: US buying has pushed Racal Telecom to 308 pence, capitalising it at over UKP3,000m and Racal Electronics’ 80% holding in it at UKP2,400m, yet with the shares at 364 pence, the whole of Racal Electronics is valued at only UKP2,200m, which gives a negative net worth of UKP200m for all the company’s other business, which suggests a dramatic rerating is due.
