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Wealth Column: Superloop Ltd (SLC)

Wealth Column: Superloop Ltd (SLC)
May 12, 2015 By Tim Morris

Company: Superloop Ltd
ASX Code: SLC
Shares on Offer: 17.5m
Listing Price: $1.00
Market Capitalisation: $90.0million
Listing Date: June 4th  

The Asia Pacific region has a substantial, yet under utilised communications infrastructure legacy. It accounts for 85 per cent of the world’s established fibre and microwave route kilometres, yet household internet penetration is below the world average, ahead of only Africa.

Driving the disparity, approximately 40 per cent of populations in the Asia Pacific region live beyond the reach of existing operational fibre transmission networks. The coming listing of Superloop intends to build upon the region’s strong back bone infrastructure by firstly addressing connectivity gaps in major metropolitan areas.

Incorporated in 2014, the start up enterprise is focused on the development and commercialisation of metropolitan fibre optic networks in the Asia Pacific. It aims to address capacity shortfalls between data centers and submarine cable stations. Superloop holds operating licenses in Australia and Singapore. It has exclusive access rights to a 130km metropolitan fibre optic network currently under construction in Brisbane, Sydney and Melbourne; and is building a 120km fibre network in Singapore.

Proceeds from its Initial Public Offer are scheduled to fund completion of the Singaporean network and provide working capital. Incentive for new investors is provided by its near term earnings potential.  The Company has secured cornerstone customers bearing typical contract terms of five years and commencement of its Australian access rights is scheduled in Q3. Fulfilling its domestic and emerging Singaporean capacity through additional contracts, followed by cash flow are the major drivers.

Risks surround the company’s reliance on external capital and potential for its capital investments to be met with insufficient end user demand. To a large degree, the track record of Superloop’s management team mitigates these uncertainties, having created value from multiple forays involving telecommunications infrastructure. Hence whilst Superloop’s limited operating history and lack of historical income creates a speculative risk profile, the outlook appears generally positive.   

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Tim Morris Author: Tim Morris May 12, 2015

Having studied Commerce and Science at the University of New South Wales, Tim began his career in an analytical capacity with Wise-owl. Tim has conducted over 500 corporate valuations and appraisals, specialising in pre revenue assets and emerging markets. For the last five years, his Equity Capital Market insights have been featured as part of a weekly column in The Australian and regularly features on Sky News, CNBC, ABC and Bloomberg TV.

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