3 small telcos worth a closer look


With earnings season in full swing, these three small cap telecommunication companies are worth a closer look, writes The Motley Fool

Amcom Telecommunications (ASX:AMM) weighs in at slightly under a $200m market cap. This Perth based telco owns and operates a 1,600 kilometre optical fibre network.

Amcom has a high level of recurring revenue and a strong customer base to upsell their expanding range of services. Those services now include a cloud offering, the current ‘big thing’ in IT circles. Proving it’s not pie in the sky, Amcom signed a $9m cloud partnership with The University of Western Australia in July.

Amcom recently announced strong underlying earnings and forecast double digit growth this year, and are worth a closer look.

Sticking with Amcom, they recently distributed to shareholders their remaining 20% ownership in iiNet Ltd. (ASX:IIN). The $350m market cap iiNet announced slightly disappointing earnings, losing ground in the  broadband subscriber battle. Perhaps iiNet is feeling some pain from a resurgent Telstra (ASX:TLS)?

Despite the stumble iiNet are firmly entrenched as Australia’s number two internet service provider.

iiNet’s board sensibility announced a 5% share buyback. That should mop up some of the shares Amcom shareholders are likely to tip into the market in coming weeks. Even still, that oversupply of iiNet shares may see the shares harshly punished in the coming weeks. Investors should be alert to a buying opportunity.

I’m expecting BigAir Group (ASX:BGL) to reveal excellent growth when it reports.

BigAir is the leading provider of wireless broadband solutions for business and campus environments across Australia. They own and operate Australia’s largest fixed wireless Ethernet broadband network.

While its past growth has been sensational, much of that growth was via acquisition. Fortunately BigAir didn’t overpay and if its fixed wireless strategy can gain more traction, investors should be well rewarded. The stock is too speculative for me and the potential market size appears limited, but BigAir is certainly a small cap growth company worth keeping an eye on.

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Dean Morel is The Motley Fool’s Investment Analyst. Dean is long Telstra and Amcom, he also just found some iiNet shares in his account. He has no position in BigAir, but eagerly awaits its earnings. The Motley Fool’s disclosure policy is also worth a closer look.

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