Wireless operator BigAir worth twice the price

Stuart Corner
Monday, 08 February 2010 12:20

IT Industry - Strategy

Investment research firm, MicroEQUITIES has issued a strong buy recommendation on wireless broadband network operator, BigAir (ASX: BGL), saying its shares should be worth twice the price of about eleven cents they are currently trading at.

BigAir Group owns fixed WiMAX broadband networks using class licensed (effectively unlicensed) spectrum in major metropolitan areas. It specialises in providing last mile access to businesses at bandwidths up to 1Gbps symmetrical.

According to MicroEQUITIES' analyst Bob Liu, "As a 'last mile' carrier, BigAir's fixed wireless service has, on average, a high sustainable gross margin of 75-80 percent.

BigAir announced in October 2009 that it was expanding its network into Perth, Adelaide and the Gold Coast using equipment from its current WiMAX gear supplier, Airspan Networks and according to MicroEQUITIES is making its first foray into the ACT market.

MicroEQUITIES believes the network expansion as well as increased demand for BigAir's services across its existing network will underpin earnings growth for FY10.

"Management has undertaken a substantial reduction in operating expenses as a result of the closure of iBurst," MicroEQUITIES says "These factors are combined with the network's current high excess capacity, and network expansion we believe will drive earnings growth over the FY10 & FY11.

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