Pentanet (ASX:5GG) share price jumps after news of 5G deal

The Pentanet Limited (ASX: 5GG) share price is responding well to news the company secured an exclusive licence to provide 5G.

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Pentanet Ltd (ASX: 5GG) shares are on the move today following news the company has secured an exclusive licence to provide high band 5G services. In early trade, the Pentanet share price jumped almost 6% to 93 cents before partially retreating. At the time of writing, the company's shares are trading at 90 cents, up 2.27% on yesterday's close.

According to the company, for the next 15 years, Pentanet can exclusively offer its Western Australian customers access to high-performance transmission "at the forefront of the delivery of millimetre wave fifth generation (5G) wireless broadband services".

Let's take a closer look at what's soon to be Pentanet's newest offering.

A "once in a generation" opportunity for Pentanet

The Pentanet share price is responding positively after the Perth-based telco announced it has been awarded an exclusive license to transmit 5G services on the 26 GHz range. It says the licence will allow it to provide multi-gigabit broadband to any customer in its service area.

Pentanet's managing director Stephen Cornish said securing the exclusive licence is a "once in a generation" opportunity. 

According to Pentanet's release, the 26GHz band is the best way to transmit 5G.

The company can now provide broadband to customers within 5 kilometres of any 5G tower, rather than the 250 metres it was previously banking on. Customers will be able to access Pentanet's 5G service in Perth, Mandurah, Bunbury and Margaret River.

For 15 years of exclusive use of the technology, Pentanet will pay $8 million dollars. It will do so in annual instalments over 5 years. $1.6 million will be paid this financial year out of the company's existing cash reserves.

The telco won the licence to use the high-band spectrum in an auction conducted by the Australian Communications and Media Authority.

Commentary from management

Cornish commented that the 5G spectrum will speed up the deployment of its Terragraph service and extend its network coverage. He said:

Having access to our own 5G licensed spectrum elevates us to a new height as a telecommunications carrier. We went into the auction unsure if we would be able to compete with the larger players, but our team was able to strategically secure a meaningful allocation at a price point that made sense for our use-case.

Pentanet share price snapshot

Pentanet floated on the ASX in January of this year and, since then, its share price has been performing well.

Currently, the Pentanet share price is trading around 50% higher than the day of its initial public offering.

Pentanet has a market capitalisation of around $154 million, with approximately 263 million shares outstanding.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia has no position in any of the stocks mentioned. 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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