Jaiz Anuar
A Quick Take On Tower One Wireless Corp.
Tower One Wireless Corp. (TO) (OTCQB:TOWTF) has filed to boost $86 million in an IPO of its Class A standard shares, in keeping with an F-1 registration assertion.
The agency leases communication web site area to cellular community operators in varied nations.
Tower One is rising income but in addition utilizing important free money circulate.
I’ll present a closing opinion after we be taught extra concerning the IPO.
Tower One Overview
Bogota, Colombia-based Tower One was based to develop, personal and function multitenant communications websites for lease to cellular community operators in massive Spanish-speaking nations in Latin America.
Management is headed by President, CEO and interim CFO Alejandro Ochoa, who beforehand labored at monetary companies companies comparable to Morgan Stanley, Prudential Securities and Raymond James.
The firm’s nations of operation (or quickly to be) embody:
-
Ecuador
-
Argentina
-
Colombia
-
Mexico
Tower One has booked truthful market worth funding of $20 million as of March 31, 2022 from traders.
Tower One’s Customer Acquisition
The firm’s gross sales crew seeks to lease its multitenant services to cellular community operators desirous to increase or enhance their community protection.
Tower One says it has “strategic relationships” with main Latin America carriers, together with Telefonica, AT&T, Millicom and America Mobile.
Advertising and Promotion bills as a share of complete income have risen as revenues have elevated, because the figures beneath point out:
|
Advertising and Promotion |
Expenses vs. Revenue |
|
Period |
Percentage |
|
Three Mos. Ended March 31, 2022 |
4.5% |
|
2021 |
2.2% |
|
2020 |
1.5% |
(Source – SEC)
The Advertising and Promotion effectivity a number of, outlined as what number of {dollars} of further new income are generated by every greenback of Advertising and Promotion spend, rose sharply to 16.3x in the newest reporting interval, as proven within the desk beneath:
|
Advertising and Promotion |
Efficiency Rate |
|
Period |
Multiple |
|
Three Mos. Ended March 31, 2022 |
16.3 |
|
2021 |
6.6 |
(Source – SEC)
Tower One’s Market & Competition
According to a 2021 market research report by Mordor Intelligence, the worldwide market for telecom towers was an estimated 4.34 million items in 2020 and is forecast to achieve 5.3 million items by 2026.
This represents a forecast CAGR of three.34% from 2021 to 2026.
The primary drivers for this anticipated development are a rise in demand for cellular broadband entry in addition to rollout of the brand new 5G wi-fi customary.
Also, the chart beneath exhibits the anticipated development charges of assorted areas globally, with Central and Latin America being projected to develop on the slowest fee of development by way of 2026:
Global Telecom Tower Market (Mordor Intelligence)
Major aggressive or different trade contributors embody:
American Tower (Argentina, Colombia, Mexico)
BTS Towers (Colombia, Ecuador)
Continental (Colombia, Mexico)
DigitalBridge (Colombia, Mexico)
IHS Towers (Colombia)
Innovatel/Torresec (Argentina, Colombia, Ecuador)
Phoenix Tower (Argentina, Colombia, Mexico, Ecuador)
SBA Communications (Argentina, Colombia, Ecuador)
Sitios Latinoamerica (Argentina, Ecuador)
Telesites (Mexico)
Torrecom (Colombia, Mexico)
Tower One Wireless’ Financial Performance
The firm’s current monetary outcomes may be summarized as follows:
-
Growing topline income
-
Increased gross revenue however reducing gross margin
-
Growing working revenue
-
Increasing money utilized in operations
Below are related monetary outcomes derived from the agency’s registration assertion:
|
Total Revenue |
||
|
Period |
Total Revenue |
% Variance vs. Prior |
|
Three Mos. Ended March 31, 2022 |
$ 3,104,154 |
278.7% |
|
2021 |
$ 8,336,348 |
17.1% |
|
2020 |
$ 7,118,344 |
|
|
Gross Profit (Loss) |
||
|
Period |
Gross Profit (Loss) |
% Variance vs. Prior |
|
Three Mos. Ended March 31, 2022 |
$ 1,253,949 |
64.6% |
|
2021 |
$ 3,449,022 |
5.9% |
|
2020 |
$ 3,256,554 |
|
|
Gross Margin |
||
|
Period |
Gross Margin |
|
|
Three Mos. Ended March 31, 2022 |
40.40% |
|
|
2021 |
41.37% |
|
|
2020 |
45.75% |
|
|
Operating Profit (Loss) |
||
|
Period |
Operating Profit (Loss) |
Operating Margin |
|
Three Mos. Ended March 31, 2022 |
$ 4,066,074 |
131.0% |
|
2021 |
$ 8,211,352 |
98.5% |
|
2020 |
$ 8,226,589 |
115.6% |
|
Net Income (Loss) |
||
|
Period |
Net Income (Loss) |
Net Margin |
|
Three Mos. Ended March 31, 2022 |
$ (1,288,158) |
-41.5% |
|
2021 |
$ (3,583,545) |
-115.4% |
|
2020 |
$ (2,865,957) |
-92.3% |
|
Cash Flow From Operations |
||
|
Period |
Cash Flow From Operations |
|
|
Three Mos. Ended March 31, 2022 |
$ (1,912,636) |
|
|
2021 |
$ (4,225,153) |
|
|
2020 |
$ 310,611 |
|
As of March 31, 2022, Tower One had $725,086 in money and $34.4 million in complete liabilities.
Free money circulate throughout the twelve months ended March 31, 2022, was detrimental ($11.1 million).
Tower One Wireless Corp.’s IPO Details
Tower One intends to boost $86 million in gross proceeds from an IPO of its Class A standard shares, though the ultimate determine might differ.
Class A standard shareholders will obtain one vote per share
The S&P 500 Index now not admits companies with a number of courses of stock into its index.
The firm’s stock is at present quoted on the OTCQB market below the image “TOWTF”, on the Frankfurt Stock Exchange below the image “1P3N” and on the Canadian Securities Exchange below the image “TO”.
No current shareholders have indicated an curiosity to buy shares on the IPO worth.
Management says it should use the web proceeds from the IPO as follows:
for development and buy of towers and infrastructure growth, together with all points of web site acquisition, allowing and funds of licenses and relevant taxes, with the rest, if any, for working capital.
(Source – SEC)
Management’s presentation of the corporate roadshow isn’t obtainable.
Regarding excellent authorized proceedings, the agency has not accrued any authorized declare legal responsibility however is at present topic to claims probably totaling a most of CA$318,536 plus authorized and court docket prices.
The sole listed bookrunner of the IPO is Maxim Group.
Commentary About Tower One’s IPO
TO is searching for to go public within the U.S. to offer funding for additional tower growth, acquisition and for its basic development initiatives.
The firm’s financials have produced rising topline income, greater gross revenue however diminished gross margin, rising working revenue however rising money utilized in operations.
Free money circulate for the twelve months ended March 31, 2022, was detrimental ($11.1 million).
Advertising and Promotion bills as a share of complete income have risen as income has elevated; its Advertising and Promotion effectivity a number of rose sharply to 16.3x in the newest reporting interval.
The agency at present plans to pay no dividends and to retain future revenue to reinvest again into the corporate’s development initiatives.
TO’s CapEx Ratio is detrimental (0.9), which signifies it’s spending closely on capital expenditures as a share of its working money circulate.
The market alternative for offering wi-fi system infrastructure is massive and anticipated to develop at a reasonable fee of development within the coming years, whereas the corporate faces important competitors from a lot bigger market contributors.
Maxim Group is the only real underwriter and IPOs led by the agency over the past 12-month interval have generated a median return of detrimental (41.6%) since their IPO. This is a bottom-tier efficiency for all main underwriters throughout the interval.
The major danger to the corporate’s outlook is the rising price of capital and its heavy capital expenditure necessities which can exert a drag on the stock in a stock market that’s penalizing such firms.
When we be taught extra about administration’s pricing and valuation assumptions, I’ll present a closing opinion.
Expected IPO Pricing Date: To be introduced.