Over the Wire Holdings Ltd (ASX: OTW) is on track to beat its prospectus forecasts according to its most recent ASX announcement.

Over The Wire revised its guidance for the 2016 financial year (FY16) of revenues to $23.4 million from $22.2 million, earnings before interest, tax, depreciation and amortisation (EBITDA) up to $5.1 million from $4.5 million and net profit after tax (NPAT) up 29% to $2.7 million from $2.1 million.

The company listed in early December 2015 at $1.00 a share and the share price has already doubled – last trading at $2.02, but Over The Wire still has a fairly small market cap of $88 million.

The company operates 3 Brisbane-based data centres, an enterprise hosting business (formerly Sanity Technology) a Gold Coast based VOIP business (Faktortel) along with a national data and voice network. A recent acquisition (Spiderbox) brings in assets including the fibre network at Brisbane Technology Park and introduces 100 new clients to the company.

Over the Wire also offers telecoms, cloud and IT products and services as well as customer-focused technical solutions, and has more than 6,500 customers, with business customers generating 96% of revenues.

The company is still reliant on the likes of TPG Telecom Ltd (ASX: TPM), Vocus Communications Limited (ASX: VOC) and Telstra Corporation Ltd (ASX: TLS) for access to their network infrastructure, while Faktortel competes against several VOIP service providers including the three mentioned above and MNF Group Ltd (ASX: MNF) – ex-MyNetFone. Nextdc Ltd (ASX: NXT) also competes with Over The Wire in the data centre space.

But while there are several competitors to Over The Wire, there’s also the potential for any one of those competitors to acquire Over The Wire – as the smallest operator.

And if the company continues to grow like it has been, it may not have to wait long. The recent update was based on higher sales and lower telecommunication costs (The ACCC forced Telstra to lower its wholesale costs recently) as well as synergies from its acquisitions being delivered ahead of plan.

Foolish takeaway

Given the tailwinds in the technology space, Over The Wire could grow into a major telecommunications provider, competing with the likes of Telstra, Vocus and TPG. That is as long as it doesn’t get taken over beforehand. Add this one to your watchlist.

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Motley Fool writer/analyst Mike King owns shares in Vocus, TPG Telecoms and Telstra Corporation. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.