Bigblu Broadband (BBB) has established a strong position as an alternative and rural broadband provider across multiple geographies using satellite, fixed wireless and 4G/5G technologies. Its customers are homes and businesses unserved or underserved by fibre and the group is in a strong position to leverage the heavy investment made by satellite operators in high-speed broadband as well as its own selective roll-out of ultrafast and giga-fast fixed wireless services. With Bigblu set for strong organic growth and well established in key markets, the days of high M&A and equity issuance also appear to be over.
Last week, Bigblu announced that it has won preferred partner status with Eutelsat. This non-exclusive deal will leave BBB free to offer customers a range of packages, but Bigblu will benefit from heavy investment in marketing and customer premises equipment by Eutelsat in return for revenue share. This should lead to continuing acceleration of subscriber growth from the recent expansion of BBB’s sales network into Poland, Spain, Finland, Norway and Sweden, with the added benefit of the UK, Ireland and France now being covered by the deal and 50Mbps offer.
With the addition of c 2k European subscribers in Q3, BBB is well advanced in its aims to build subscriber numbers ahead of the launch of Eutelsat’s new-generation, high-throughput satellite in Q419. This will enable unlimited data packages and speeds of up to 100Mbps, boosting the addressable market to 196m non-FTTH/B EU households from the current 27m with speeds <4Mbps. In Australia, BBB is winning 40% of current satellite broadband net additions, helped by state subsidies.
With Bigblu now established across its key geographies, organic growth should accelerate, while increased scale and further integration of previous acquisitions should lead to improved margins and cash generation. Across all geographies, acquisitions are likely to continue to help drive down supplier charges and leverage BBB’s highly scalable, multi-language cloud CRM, billing and finance platform.
BBB trades on a 9.5x 2018e EV/EBITDA, which is 9% and 35%, respectively, below the averages for UK and international small-cap telecom stocks. With BBB’s consensus two-year EBITDA growth at 26.8%, well ahead of the 4.0% and 11.5% for its two peer groups, respectively, we see potential for BBB to outperform.
