Research house NRA Capital likes 8Telecom International, calling the company a "potential telco of tomorrow" and giving it a fair value of 18.1-29.8 cents, representing an upside of 30.1-114.7% from its current share price of 14 cents.
The recommendation comes after 8Telecom's 51% owned subsidiary Arete M was granted a licence by the IMDA to use the 1.79-1.80 GHz radio frequency spectrum for the provision of communication solutions. With the spectrum, Arete M plans to offer dedicated private LTE networks to industrial users and public safety and emergency services.
A private LTE network offers a higher level of service quality in terms of reliability and availability unlike commercial and consumer-based shared networks. A dedicated LTE network also serves large amounts of data to multiple users over a wide range of up to 10km with low interference and latency.
This makes it suitable for communication within fleets of unmanned vehicles which are currently on trial by various government agencies, says analyst Liu Jinshu in an unrated Tuesday report. In addition, while existing telcos pay more than $1 million per year of 10MHz of spectrum, Arete M secured its spectrum for about $80,000 per year.
8Telecom currently has a market cap of $12.9 million backed by negative equity of $0.3 million and tangible assets of $0.5 million as of end 3Q16. But more advanced IoT companies have been valued at up to US$600 million ($853 million). As such, Liu has provided a rough valuation of $135 million to $387 million for 8Telecom.
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