Newly minted fibre-optic internet business Superloop Ltd (ASX: SLC) this morning announced it has inked a deal with the Hong Kong regulator to provide high-speed internet services across the Chinese territory.
Superloop hit the ASX boards back in June after shares were available for initial public offer at $1 and just two months later the stock has more than doubled in value to sell for $2.46 today.
The news that the business has received a license in Hong Kong follows on from news that the company has met regulatory targets in Singapore after the installation of at least 80 km of fibre optic cable.
It now has more than a foot in the door in both Singapore and Hong Kong, where the relatively well regulated environments are what makes them attractive business, investment and technology hubs in the fast-growing Asia Pacific region.
Jurisdictions like Singapore have a reputation for being tightly regulated (especially for overseas business entrants) in the financial and consumer services space and Superloop's success in building its business there is a promising sign for those buying into its Asian growth prospects.
Tailwinds
The company provides data centre and cloud traffic services and is targeting the Asia Pacific region as a growth opportunity due to its size and the high levels of urban interconnectivity density. The markets for dark fibre and data centre services are also immature compared to Australia.
The business also has the rights to fibre optic cable networks in Sydney, Brisbane and Melbourne where it's an effective competitor to more established players such as Vocus Communications Limited (ASX: VOC).
Demonstrating the tailwinds businesses in the data centre and dark fibre sector enjoy is the fact that Vocus has more than tripled in value in less than three years.
These kind of fibre-optic internet businesses have relatively fixed cost bases as clients are added to the networks for little additional cost, while both businesses should also benefit from the explosive demand growth for cloud data centre traffic.
The cloud cash in
The growth in demand for data and cloud computing are two long-term trends investors should look to cash in on. Both these trends may accelerate as internet and especially video traffic increases alongside the rapid growth in the number of internet connected mobile devices in use worldwide.
Both Superloop and Vocus also have big-hitting management teams, with Superloop founded by technology entrepreneur Bevan Slattery, while Vocus is led by well-regarded telco-whiz James Spenceley.
All aboard the fibre-optic express
In my opinion both these businesses look to have exciting futures, although valuing a business like Superloop with little financial history and limited earnings forecasts is difficult. It also only issued 17.5 million shares to raise $17.5 million at its IPO, which means the stock is not especially liquid.
Vocus on the other hand has recently completed its merger with Amcom and while the integration carries some risk it looks reasonable value at $6.11 given its anticipated earnings growth prospects.
