Netcomm Wireless Ltd strikes digital gold with NBN deal

Has Netcomm Wireless Ltd struck online gold?

Tom Richardson

Tom is a holder of the CFA Society of the UK administered Investment Management Certificate (IMC) and has more than a decade's professional experience in the investment management industry in Australia and the UK. Tom now works as a writer and editor for TMF Australia and has two easy to remember rules of investing he likes to follow. Avoid overpaying for growth stocks and avoid paying at all for stocks that are cheap for a reason. Tom prefers growth investing over value investing and says it's not rocket science, just avoid overpaying for the best returns.

Published November 23, 2016 12:11 pm AEDT

Shares in wireless internet provider Netcomm Wireless Ltd (ASX: NTC) have climbed 20 per cent in morning trade after the company revealed a landmark deal to supply distribution point units (DPUs) and services to the government's National Broadband Network (NBN) company.

NetComm will supply and install the technology required to make the NBN's move into fibre-to-the-curb services available to Australian households rather than connections via the existing copper lines.

NetComm stated that while no specific DPU volume numbers are contained in the agreement it does believe the contract will have a "material" impact on the company's revenue in the coming years.

This is good news for investors who have bid the stock up to $2.65 this morning, although it remains down 10 per cent over the last year after the company posted a 17.7% plunge in net profit to $2.03 million for the year ending June 30 2016.

Overall, the company remains well positioned for the growth in demand for NBN internet connections, wireless internet services, and the rise of machine-to-machine communication facilitated by online technologies.

Others in the space include BigAir Group Limited (ASX: BGL) and Superloop Ltd (ASX: SLC). BigAir being a wireless internet business that recently received a takeover offer from the Bevan Slattery-run dark fibre startup Superloop in a sign that it may be premature to call time on merger and acquisition activity at the smaller end of the telco industry.

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