The Safaricom deal was significant both financially and strategically. Financially the deal is $12M for the initial phase of a 36 month deal. So already its likely a $30-40M deal over 3 years. Strategically the deal places ALVR in alliance with Vodaphone since they are part of the Safaricom joint venture. It also place them with an aggressive mobile operator with over 14M customers in Kenya and East Africa. This partnership could easily be expanded down the road.
- With a subscriber base of over 14 million and about 2,000 base stations across the country, Safaricom is Kenya’s leading total telecommunications services provider with a huge investment and market leadership in both voice and data services.
- Formed at the turn of the decade as a joint venture between Vodafone and Telkom Kenya, the firm has built a solid reputation as a hot-house for innovation. Two years ago, it pioneered M-PESA, the first mobile money transfer service, anywhere in the world. Only recently, Safaricom, in another global first, became the first firm to commercially launch a solar-powered phone, Simu ya Solar.
- Clearwire International, LLC, a holding entity of Clearwire Corporation (NASDAQ:CLWR - News), offers a robust suite of advanced high-speed Internet services to consumers and businesses. As part of a multi-year network build-out plan, Clearwire’s 4G service, called CLEAR™, will be available in major metropolitan areas across the U.S., and bring together an unprecedented combination of speed and mobility. Clearwire’s open all-IP network, combined with significant spectrum holdings, provides unmatched network capacity to deliver next-generation broadband access. Strategic investors include Intel, Comcast, Sprint, Google, Time Warner Cable, and Bright House Networks. Clearwire currently provides 4G service, utilizing WiMAX technology, in 16 markets and provides pre-WiMAX communications services in 40 markets across the U.S. and Europe. Headquartered in Kirkland, Wash., additional information about Clearwire is available at www.clearwire.com.
As we posted yesterday, ALVR has remained one of our most frustrating investments. They've signed some impressive deals this year including the ones with Open Range and France Telecom. It just never seems to help the stock. ALVR trades at ridiculous EV/BV and EV/Sales ratios, but that is nothing new for this stock. Too many fear the demise of WIMAX and therefore are unwilling to place any reasonable valuation multiple. For a company that primarily focuses on emerging markets, its surprising that they struggle to grab the momentum traders. They have reported sporadic earnings over the last few years having continually decided to invest highly in R&D, but with a pristine balance sheet that shouldn't be a huge concern to investors. As WIMAX continues to grow in places like Latin America and Africa, ALVR will easily be able to cover those expenses and grow to a very profitable company.
Anybody wanting to buy should've jumped in yesterday, but at $4.30 its still way too cheap to let pass by.
Disclosure: Long ALVR