Australia’s telecommunications sector is widely seen to have finished all its mergers and acquisitions – with no smaller companies left to hoover up.
We are now left with the giants Telstra Corporation Ltd (ASX: TLS), Optus, Vocus Communications Ltd (ASX: VOC) and TPG Telecom Ltd (ASX: TPM). The likes of iiNet, M2 Group, AAPT and Amcom have all been integrated.
But there are still a number of rising telecommunications companies that could be takeover targets. Here are four of them.
Over The Wire Holdings Ltd (ASX: OTW)
Over The Wire operates a number of data centres as well as a national data and voice network. Since listing at $1.00 per share in December 2015, the company has seen its share price nearly triple to $2.85. Strong growth prospects have seen the company beat its revised prospectus forecasts for the 2016 financial year and there’s no reason 2017 can’t be another strong year.
Superloop Ltd (ASX: SLC)
Chairman and CEO Bevan Slattery is a prolific technology founder. He was the founder of Nextdc Ltd (ASX: NXT) in 2010 – now worth $1.1 billion, and also set up Pipe Networks (acquired by TPG Telecom) as well as Superloop.
Superloop owns a number of dark fibre networks in Australia, connecting critical data centres in a number of capital cities. The company also operates cable networks in Singapore and is currently building one in Hong Kong with completion expected during December 2016. Superloop recently reported that it had achieved $10 million of annualised contracted revenue and although not yet profitable, the company says it is focused on ‘achieving EBITDA breakeven as quickly as possible‘. Superloop also acquired microwave broadband provider BigAir Limited (ASX: BGL) in September.
Megaport Ltd (ASX: MP1)
Not surprisingly, Chairman Bevan Slattery is also the founder of Megaport. The company now offers its products and services through North America and Europe, as well as Australia and Asia, across 102 locations and 17 countries. The services allow customers to connect their network and other networks and cloud providers already connected to Megaport and other service providers.
Speedcast International Ltd (ASX: SDA)
Speedcast provides satellite internet access to thousands of customers across several industries where fibre, cable or other technologies are simply impossible or impractical. That includes ships at sea, mining teams far from civilisation, small islands, defence and oil rigs. The company is growing both organically and via acquisition and although the current price is not cheap – it has pulled back a long way from the high of $5.19 it hit in October 2015 to $3.85 currently.
|Company||Share Price||Market Cap ($m)||Annualised revenues ($m)|
|Over The Wire Holdings Ltd (ASX: OTW)||$2.85||$124.0||$23.6|
|Superloop Ltd (ASX: SLC)||$2.98||$374.1||$92.6*|
|Megaport Ltd (ASX: MP1)||$2.65||$148.1||$2.7|
|Speedcast International Ltd (ASX: SDA)||$3.85||$548.4||$267.0^|
Source; Google Finance, *inclusive of BigAir, ^converted from US dollars
They may not appear cheap, but all four companies are worthy of adding to your watchlist.