High penetration rate for a small WISP would not necessarily make it more value to me as a potential purchase. No room to grow.
From: Brian Webster Sent: Thursday, January 12, 2017 2:41 PM To: af@afmug.com Subject: Re: [AFMUG] Price per sub? That is why I brought that point up. Most states have broadband adoption rates between 74 and 77 percent of the homes passed. That is the adoption rate for all broadband providers combined not any one carrier. Some higher adoption rates reach 80% and as Chuck mentioned in their particular neighborhoods they have achieved 84% which is not surprising if you are the first carrier in AND offer fiber. Their claim of 90% as one carrier in the face of competition is suspect as to what they think penetration is to them. I suspect it is the percentage of leads that come in to them and they close and make that lead a paying customer. Knowing the total potential homes passed and comparing that to the number of subscribers will tell you the WISP’s market penetration rate. Look at the other competitors in that same area and asses what may be potential for subscriber growth using the existing infrastructure. It would also be crucial to assess the potential for the sites to add dedicated PTP radios and be able to sell dedicated enterprise business connections. Many WISP’s are finding that as a tremendous growth market without having to do a large footprint expansion, and these customers are much higher revenue with less customer support requirements. It’s a different business model and sales mentality but for many WISP’s it’s a fairly easy overlay on their existing market area. If the WISP does not already have a coverage map created you should have one done so that you can see the true market potential and be able to calculate the homes passed. It is good to look at that potential compared to the competitive broadband providers and also look at where there may be overlap to your network. No sense paying for something you already can cover. Thank You, Brian Webster www.wirelessmapping.com www.Broadband-Mapping.com From: Af [mailto:af-boun...@afmug.com] On Behalf Of Ken Hohhof Sent: Thursday, January 12, 2017 11:34 AM To: af@afmug.com Subject: Re: [AFMUG] Price per sub? I am confused when he says they have 90% “take rate” yet there is another WISP competitor in the area. I assume there are also people with Hughesnet, Exede, mobile hotspots, and Luddites with no Internet. Perhaps he means something other than they have 90% of households in the coverage area as customers. I can understand with a $20 plan they could sweep up even the people who could almost use dialup. Still 90% market penetration in the face of competition seems amazing. I’m guessing 10% of households in my area don’t have any kind of fixed Internet, either because they don’t need no stinkin’ Internet, or because they just use the data plan on their smartphone. From: Af [mailto:af-boun...@afmug.com] On Behalf Of Chuck McCown Sent: Thursday, January 12, 2017 10:15 AM To: af@afmug.com Subject: Re: [AFMUG] Price per sub? We see the asymptote converging on about 84% in our FTTH neighborhoods. From: Brian Webster Sent: Wednesday, January 11, 2017 7:36 PM To: af@afmug.com Subject: Re: [AFMUG] Price per sub? A couple of things that seem to always come up in these deals. One, what future revenue has already been taken by the current owners. What I mean by that are prepaid annual contracts, side deals on site rent in exchange for relay sites, stuff like that. Second, is the owners tend to want you to buy their potential. When you say 90% take rate you should dig in to those numbers. The highest adoption rate in America are only about 80% of households passed. Are they saying 90% take rate on leads that come in? How many homes does their network potentially cover vs. number of subscribers. How much competition is there for those homes. What equipment do they have deployed, signal levels and client distances? This will have a big effect on your ability to upsell bandwidth. If the clients are all marginal connections you will not have the ability to deliver much capacity off the sectors if you want to upsell or if customer want more bandwidth. This means upgrades at your own cost. Third, look very carefully at tower site leases or agreements. Are there any? Do they allow for a transfer of ownership and stay in effect? Are there balloon rent increases that would change your forecasts? Do they have renewal terms that are long enough for you to make your money on the purchase of their company? Large company or small being purchased the tower site agreements are one very important thing to dig deep on the details. Thank You, Brian Webster www.wirelessmapping.com www.Broadband-Mapping.com From: Af [mailto:af-boun...@afmug.com] On Behalf Of Mike Hammett Sent: Wednesday, January 11, 2017 9:08 PM To: af@afmug.com Subject: Re: [AFMUG] Price per sub? I hear that is around 12x - 18x months of revenue and a heck of a lot easier to calculate when ballparking. They know their revenue (or well, is somewhat easy to figure out). They probably can't spell EBITDA. ----- Mike Hammett Intelligent Computing Solutions Midwest Internet Exchange The Brothers WISP -------------------------------------------------------------------------------- From: "Chuck McCown" <ch...@wbmfg.com> To: af@afmug.com Sent: Wednesday, January 11, 2017 3:16:00 PM Subject: Re: [AFMUG] Price per sub? 4x ebitda From: Josh Reynolds Sent: Wednesday, January 11, 2017 2:14 PM To: af@afmug.com Subject: Re: [AFMUG] Price per sub? How many subs? On Jan 11, 2017 3:13 PM, "Brett A Mansfield" <li...@silverlakeinternet.com> wrote: When looking at buying a competitor, I'm wondering what everyone's thought is on a price per sub? They don't do contracts and they use the litebeam hardware. I'm not looking for legal advice, just wondering what all of you think is fair. This company has about a 90% take rate in the area they're in. Their plans are $20, $40, and $50/mo. Thank you, Brett A Mansfield
