There is one minor negative with BGL and it's one I have always considered... its cashflow is tiny compared to Telstra for example; perhaps generates 5m per year.
While it can grow and perhaps double in size or triple in size over about two or three years... the risk of a larger entrant coming in and cannibalisig profitability just to steal market share will always be there.
That's why i think there is some limit to the speed of its growth. At the moment it has been flying under the radar, probably because the technology and the market place aren't considered worth exploring.
At the moment its monthly rev / ebitda is about 2m / 600k... possibly generating 7m per year before capital depreciation
I think we will soon see entrants to the market looking to take market share...it just looks too tempting and its almost small enough for a backyard operator to compete. Still has low barriers to entry.
Eventually this business will need to diversify or it will end up as a business unit of a much larger telco.
BGL Price at posting:
26.0¢ Sentiment: Hold Disclosure: Held
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