The SKY and Space Global Ltd (ASX: SAS) share price has continued its incredible rise with another 10% gain today.
This means that the communications infrastructure company's shares have now risen a staggering 740% in the last six months.
Today's gain comes as a result of an announcement that its first wholesale operator, Sat-Space Africa, has secured new commercial contracts for the bandwidth provided by the company's exciting nano-satellites.
According to the release the contracts will see a portion of the company's nano-satellite communications bandwidth sold to new end users. These customers are in addition to SKY and Space Global's existing customer base.
Initially Sat-Space Africa has forecast potential revenues from these new customers of approximately US$500,000 per annum.
But once SKY and Space Global's constellation is deployed, the company believes potential revenues from these new customers range from US$10 million to US$35 million annually.
Impressively, once its full Equatorial constellation of 200 nano-satellites is in operation, management believes it has the potential to generate US$600 million to US$1 billion in annual revenues.
Because of this potential it is little surprise to see that investors have been piling into the company in the last few months.
But is it a buy?
SKY and Space Global is undoubtedly an exciting company with enormous potential. If it delivers on its ambition to use its nano-satellite technology to provide affordable mobile coverage to an estimated four billion people that are currently without it, then the sky really is the limit.
But there's a long way to go until that is a reality. The next step for the company will be the launch of its first three trial nano-satellites in the second quarter of 2017.
I would suggest investors hold back until these trials are complete. In the meantime an investment in traditional telecommunication companies such as Amaysim Australia Ltd (ASX:AYS), Vocus Group Limited (ASX: VOC), and TPG Telecom Ltd (ASX: TPM) might be better options for investors.
