Prospectus can be found at www.5GNetworks.com.au. The CEO, Joe...

Prospectus can be found at www.5GNetworks.com.au.


The CEO, Joe Demase, suppos y presents well and worthwhile hearing.  He has experience from two prior ASX listings before with UEcomm and Access Providers (which has been rolled up into Superloop).  5G Networks will be network (up to 350Mbps symmetrical upload and download speeds) integrated with cloud and ICT managed services. Growth will be via a roll-up in the ICT space (1.5x-4x EBITDA multiples anticipated) and roll-out of network – very cheap, Melbourne roll out will be completed by June and cost $350-$400k and cover c.80% of the SMEs outside the CBD and the capex for Melbourne, Sydney and Brisbane roll outs is expected to be A$1.4 million in total.  Therefore, this is not a business that is expected to have a cash drain that results in a prolonged capex program that drains cash resources.  The strategy is not to compete with fibre services offered in the CBD.


5G Networks is both NPAT and cash flow positive, and expected to stay that way.  They have cash, a lazy balance sheet (essentially ungeared and ready to make acquisitions) and a tight register (very little dilution with minimal performance shares / options issued to management under the ESOP only that are escrowed for 2 years).  Normalised EBITDA is $1M/year and the raise is on the basis of $7M pre-money ($11m post IPO on a $4M raise) at 7x EBITDA multiple.  The traded comparables range on the ASX is currently sitting at 15x to 32x EBITDA multiple, excluding outliers.


The business is focused on SMEs (not retail customers).  They have a wholesale agreement also with Telstra and a reseller agreement with Telstra – so they really have the best of all worlds, and allows them to service Telstra customers without having the overhead of an extensive sales team.


The 5G Networks IPO has been well received, which is a strong endorsement given the number of IPO / PP’s that are currently circulating in the market.  People see the need and the opportunity created by the roll out of the National Broadband Network (NBN) which is fibre to the node (or curb).  NBN under their mandate, is paying Telstra to shut down the copper phone network, regardless of whether there is an NBN alternative available.  This has allowed Telstra and other telco providers, to price new fibre to 3-4x what it should cost to roll out ‘last mile’ links, or otherwise the SMEs have little other choice but to use 4G sims on the Telstra 4G network, which is extremely expensive.