Very interesting deal that NTC announced during the week with Tele2, which is a European based telco. I also note that a few weeks ago that Tele2 announced an m2m deal with Vattenfall, which is a large electricity and energy company in Europe.
I note that Vattenfall has over 6.2M retail metered clients, largely based in Sweden (1.2M) Germany (2.9M) and the Netherlands (2M). I note that the customers in Sweden have now been converted to smart metres. Vattenfall has also advised recently that they are looking at converting the Germany meters to smart meters. Given the recent contract for the Victorian smart meters for NTC was circa 100K units at $125 per unit, this could be a seriously large order for NTC.
I note that NTC's 3G technology was only used in a small portion of the rollout in the Victorian smart meters with the remainder using the Wimax technology. It looks like the wimax technology is inferior to the 3g technology with sp ausnet experiencing so large issues with the wimax part of the rollout. I am certain that if the rollout was undertaken today, that 100% of the smart meters installed would be using 3G technology.
Given NTC's great track record with 3g smart meters, is it merely concidence that Tele2 and NTC signed an agreement a mere few weeks after Tele2 signing with Vattenfall who have stated they are looking at upgrading the German meters to smart? We will speculate a bit further on that below!
These figures are just rough back of the envelope numbers and is assuming NTC get a slice of this pie( a reasonable assumption given the recent deal between NTC and Tele2) ,but bare with me. Lets assume that 100% of the German meters get upgraded to NTC's 3g smart meter cards.Bullish you say, but given sp ausnets issues with wimax tech in Victoria I doubt many telco's will be stumping up to use wimax much. So 2.9M units is a large order, much larger than the 100K units for Victoria so NTC will be able get their manufacturer to sharpen their pencil, plus with an order this size NTC would probably have to sharpen it's pencil as well. So instead of 100K units at $125 with a GP of 25%, let's assume $90/unit at a GP of say 20%. That is $58M gp and given the scaleability of this business will largely drop to NPBT. Plus I assume Sweden used the wimax tech in their rollout and it's rubbish and needs to be replaced. (Potentially why they did a deal with tele2 and potentially why tele2 did a deal with NTC). Include Netherlands in the potential rollout and a guess that the Swedish stuff is rubbish then the maths double.
OK you have my inputs, you can play around with unit price, NTC's margain, and the number of units and come up with your own maths, but the fact remains that this stock is $96M market cap and this is the potential for just one deal , which would be amongst tens of thousands happening around the world ATM in the M2M space.
Seriously NTC could be anything IMHO!!!!!