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Why the Superloop Ltd share price is rocketing today

Credit: Jason Howie

The share price of Asia-Pacific focused fibre-optic internet business Superloop Ltd (ASX: SLC) is up 8.5% to $2.30 today after the business announced it had plans to build a 110km fibre optic infrastructure internet network across Hong Kong.

To fund the investment expected to be at around $45 million the company has completed a placement of shares to institutional investors at $1.90 per share to raise $41.9 million.

Superloop’s founder is internet and technology entrepreneur Bevan Slattery and the business is aiming to become a leading connectivity provider in high-density Asia Pacific regions like Singapore and Hong Kong that are likely to see surging internet demand in the years ahead.

The group also has exclusive access rights to a 130km fibre network within Brisbane, Sydney and Melbourne connecting many of the data centres within those urban areas.

The business clearly sits in something of a growth sweet spot given it services the ever-increasing demand for high-speed internet connectivity and data. The demand for data in particular growing at a rapid pace due to the shift to video and other forms of online streaming by internet users.

For investors Superloop remains a business for the top of the watch list, however its short history means it is hard to assess as an investment prospect. It also has competitors in the dark fibre space including Vocus Communications Limited (ASX: VOC) and TPG Telecom Ltd (ASX: TPM).

Today’s Hong Kong deal and the institutional support suggest Superloop is progressing in its ambitions and looks a credible growth prospect higher up the risk curve.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.

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