Description

Company Overview:
COMPANY is looking to consolidate the fragmented wireless internet service provider (“WISP”) industry in South Africa to create the biggest independent wireless broadband company in the country, as an opportunity exist due to the current market being fragmented and having no significant player.
COMPANY has recently acquired additional sizeable WISP’s to bolt on to its existing operations and is looking to further expand the group through further acquisitions.
COMPANY’s main business segment will be the provision of internet services via wireless “last mile” through its WISP alliance. It currently utilises a network of 506 high sites, 291 of these are 100% owned.
There are two main growth strategies for COMPANY: a) Growth through acquisition; and b) Growth through expansion of WISP’s.

Competitive Advantage:
• The clients’ main concern is quality and price, with COMPANY’s economies of scale and localized service, COMPANY can provide both better than any competitor.
• Through COMPANY’s free WiFi initiatives, COMPANY has become the biggest procurer of WiFi equipment in South Africa and one of the largest bandwidth procurers which provides a competitive advantage for pricing.
• COMPANY can deliver the same product as other ISP’s at almost half the price, if necessary.
• The only advantage fixed line services had over WISP’s historically was performance. Now with improved technology wireless networks can deliver similar speeds as fiber.
• COMPANY can provide localized product and services due to the decentralized model which is a key competitive advantage over larger telecom companies.
• COMPANY has also licensed 3.5GHz spectrum, which will allow COMPANY to reach more clients in areas where the spectrum would otherwise be saturated.
• COMPANY can enter into license agreements with WISP’s whereby WISP’s are allowed to use the 3.5GHz spectrum in exchange for a formula based fee.

Market Overview:
Most WISPs founded in the last 15 years in South Africa.
Currently just over 150 WISPs are registered with WAPA, however, approximately 200 are estimated to be operating in SA.
The majority of WISPs operate in non-metropolitan areas. These areas have the least amount of fixed line penetration.
The WISP target market is estimated at 3.35 million customers (less than 10% of this market is serviced).
WISPs grow at an average of 40% annually based on retail clients.
By 2019 there will also be a market of 450 000 corporate clients for WISPs.

Financials:
As of March 2015, Revenues of $6.5mn and Net Profit of $0mn.
As of March 2016, Revenues of $8.5mn and Net Profit of $1.25mn.
As of March 2017, Projected Revenues of $17.5mn and Net Profit of $3.75mn.
As of March 2018, Projected Revenues of $22mn and Net Profit of $5mn.

Transaction:
COMPANY is looking to raise between $ 4.6mn (10%) and $9.2mn (20%) at an effective P/E ratio of 10 to complete the identified pipeline acquisitions.

Posted Jul 24, 2016

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