Pentanet pitches $23m IPO

14/12/2020 - 11:00

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Pentanet has confirmed plans to list on the ASX by February with an expected market capitalisation of $66 million.

Pentanet pitches $23m IPO
Pentanet managing director Stephen Cornish. Photo: Supplied.

Pentanet has confirmed plans to list on the ASX by February with an expected market capitalisation of $66 million.

That follows a busy year for the independent, Perth-based internet service provider, which in September revealed the appointment of former iiNet chief executive David Buckingham as its chair.

According to the ISP’s prospectus, lodged earlier this morning, 90 million shares will be issued at $0.25 each, bringing total shares on issue post-IPO to 263 million.

Approximately half of funds raised will pay for telecommunications infrastructure, with the prospectus indicating that the ISP’s 40 towers, each able to support between 200 and 300 connections, are expected to reach their user capacity within the next 12 months.

At present, users must be within the line-of-sight of a tower to access the ISP’s network.

Implementation of a 5G-enabled technology that multiplies coverage is intended to re-route signals between existing subscribers and increase coverage, ergo increasing coverage per tower.

“The way we’ve designed the towers is there are fibre-optic rings running between them,” said managing director Stephen Cornish.

“As the technology improves, customers will be able to speak to others on the network.

“That will create a mesh that provides high bandwidth to all subscribers.

“They don’t necessarily need to see the tower anymore; they just need to see a subscriber.”

Mr Cornish said Pentanet will focus on improving its local network over the next year in an effort to provide the greatest value to internet users in Perth, with an eye towards offering its services outside of WA at a later stage.

While he conceded there was a need to educate the market on the value proposition of Pentanet, Mr Buckingham argued investors and customers would see the value of an ISP challenging the traditional market for internet in Australia.

“Customers have seen the NBN now for a few years,” he said.

“They’ve found out there’s something better.

“That’s what I think will help grow the business in Perth.”

A further $4 million of funds raised during the IPO will go towards implementing Australia’s first NVIDIA cloud infrastructure, which will help introduce and facilitate cloud-gaming for a wider audience in WA.

US-based NVIDIA offers cloud-based video gaming services through its GeForce Now brand, which launched in February of this year after a five-year testing process.

Mr Cornish said subscription video-gaming would become more popular over the coming years given its comparatively lower cost; however, most internet networks are ill-equipped to handle the demand at present.

“The reason these technologies aren’t out yet is that our internet can’t support it,” he said.

“Although it’s a massive task and we’re building a next gen network, the next gen applications that will run on that network are also what we’re developing in parallel to that.

“We’re fortunate to be doing that in line with [NVIDIA].

“It’s a massive new frontier.”

Euroz Hartleys will underwrite the IPO, which will close December 22.

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