Shares of EasTower Wireless, a communications infrastructure company with its headquarters in Boca Raton, Florida, began trading on a Canadian stock exchange, TSX Venture Exchange, on March 29 at 25 cents per share. Today, company representatives opened the stock exchange’s daily session with an online presence to celebrate the company’s new listing. On the day, the stock was trading at 20 cents per share. Vlado Hreljanovic, CEO of EasTower, and his team joined David Chelich, sector head of business development at the exchange, in appearing via video at the market’s opening, according to the exchange.
“EasTower Wireless is a U.S. provider of wireless communications infrastructure and related services,” the TSX Venture Exchange said. “The company specializes in the construction, installation, upgrade, and maintenance of wireless communications systems, including 5G, 4G and small cell deployments, as well as first responder or FirstNet initiatives. The company’s clients include major telecom providers, global original equipment manufacturers (OEMs), corporations and federal agencies. The company is currently operating in the Florida market and focusing on potential expansion in the southeastern region of the United States.”
Hreljanovic spoke with media outlet Streetwise Reports in March. The outlet reported that EasTower works with four-man crews, with each crew generating $65,000 to $71,000 per month. It costs about $75,000 for EasTower to train a crew and get each member certified, Streetwise repoted. It said the company has three crews operating as often as possible, and that Hreljanovic said the company plans to double that number to six by the end of August.
According to Streetwise, Hreljanovic said 40 crews is the sweet spot where the bigger players start to eye companies as takeover targets. The outlet said that Vancouver, British Columbia, Canada-based investor Darren Sontowski is a large EasTower shareholder and helped the company put together its initial public offering. According to Streetwise, Sontowski said he believes the cellular infrastructure market is fragmented among mom-and-pop players, and that he sees a great opportunity for a roll-up strategy.
“The idea here is to grow EasTower, both organically and through mergers and acquisitions, so it becomes that mid-tier to upper-tier infrastructure company that doesn’t really exist right now,” Streetwise quoted Sontowski as saying.
According to Chris Parry, founder of business news and stock analysis outlet Equity.Guru, EasTower’s average gross margin ranges from 37 to 52 percent; thus, in Parry’s view, it doesn’t take long for the company to repay its investment in crew training expense.
“At the current rate of growth, EasTower Wireless will be break even by the fourth quarter, according to estimates, but the company is also determined not to fall into a get-rich-quick mentality of cutting corners chasing short-term deals at the expense of long-term reputation,” Parry said. “Their crews are not released into the world until they’re best-in-class, and they go the extra step to ensure that they’ll remain at the front of every job queue. To me, that’s important, because you don’t want to be a company that’s a necessity; you want to also be an aspiration.”
Parry said that COVID-19 has affected many of Eastower’s competitors, with some crews retiring early, some finding other work and some parent companies not having the means to keep going through lockdowns.
“Their crash has been EasTower’s gain, with a long roster of potential takeover targets from the Carolinas to Florida, Louisiana through Texas, Oklahoma, Tennessee and Kentucky,” Parry said. “While they train their own crews, taking out competitors, absorbing their crews and upgrading their services makes all the sense in the world. In fact, EasTower has a target list of some 1,170 crews across the United States.”
Parry said he has been a buyer of EastTower Wireless in private financings in the past few years and that he owns what he called a strong position.
Don Bishop is executive editor and associate publisher of AGL Magazine.