As the Federal government is adjusting the NBN roll-out plan, it is becoming less clear when the majority of consumers will be actually be able to use it.
While we wait patiently though, there are a number of companies that are supplying that need for connectivity and speed, and investors should keep up with their stories. They are not only interesting, but turning over some good profits.
BigAir (ASX: BGL), a micro-cap with a $133 million market capitalisation, provides fixed wireless broadband services for businesses and community environments. It fills that niche market of covering an individual business site or the broadband need of a community like a retirement village, student accommodation, or even a remote site like a mining camp.
The company began to turn a profit in 2009, and since then both revenue and net profits have gone up pleasingly. Net profit after tax has gone from about $1 million to $4.75 million over the past five years. Since 2011, it has made five acquisitions to bolster its service provision and coverage.
Its most recent one was Intelligent IP Communications, which gave the company increased access and capability in supplying remote mine sites with TV, internet and phone, as well as wireless service. Intelligent IP also brings extensive microwave network and skills experience
Over the past four years of development and expansion, the company's share price has risen from about $0.10 to $0.80, and about 25% in the past six months.
Several reasons they can be successful and cost effective
The setup for the wireless network can be performed in a short time, sometimes just hours, and after that they oversee the maintenance and management of the network, so costs are relatively low for the company to initiate service, and after that the running costs are not extremely high from maintenance.
Upgrades don't require massive fit-outs, or having to wait on service from copper wire carriers like Telstra (ASX: TLS). Through its channel partners, it can manage and operate wireless connectivity all the way along the line from the cloud/internet to the customers' devices.
Another company that provides internet/telephony services apart from major carriers and ISPs is Newsat (ASX: NWT). It offers wireless and remote connectivity by satellite. It made its maiden profit in 2010, and in 2013 had a net profit after tax of $10.45 million after a large $8.6 million positive abnormal charge.
Amcom (ASX: AMM) offers fibre networking services to corporate and government clients through the its own fibre network in CBD and greater metropolitan areas of Perth, Adelaide and Darwin, as well as network nodes in all the main capital cities. Over the past four years, revenues have been growing, and NPAT has grown from $17.2 million to $20.7 million.
Foolish takeaway
One of the fun things about investing is finding out about new companies. In this case, these businesses operate in the background, and the end user might have no knowledge of them. Yet they fill a vital role that people crave — connectivity.
Investors need to keep track of where they are now, and what new areas they are moving into. How much of a market for the service is there? What competitors are there already? Also see how their profit margins and return on equity are to gauge their growth and profitability.
