Digerati Technologies, Inc. (OTCQB: DTGI) is a compelling investment opportunity and a company with an impressive track record. The Company has launched multiple award-winning subsidiary operations and shows no sign of slowing its momentum. Today, we’ll talk about:
- Digerati Technologies’ history and current business model;
- the opportunity being created for investors; and
- the multiple competitive advantages the Company has in its space.
An Impressive History from Digerati Technologies
Digerati Technologies is a company that is focused on launching and managing successful subsidiary operations in the VoIP and cloud communications market. The Company has a solid track record and historically has demonstrated its ability to create value for its shareholders.
The Company was responsible for launching ATSI Communications, an international telecommunications operator that served emerging markets in Latin America. In fact, the Company previously traded on the American Stock Exchange (AMEX) under its former name of ATSI Communications, reaching a valuation of $500 million.
Digerati Technologies is also responsible for launching GlobalSCAPE, an Internet software company and former subsidiary that specializes in secure file transfer. Today, GlobalSCAPE is a publicly-traded company listed on the New York Stock Exchange under the symbol GSB that has reached a market cap of $130 million.
The Digerati Technologies of Today
Today, Digerati Technologies’ subsidiary operations specialize in providing Cloud Communications or Unified Communication as a Service (UCaaS) to the small to medium-sized business (“SMB”) market. The Company is addressing the market demand for its services through its subsidiaries in Texas and Florida, Synergy Telecom and T3 Communications respectively.
Through Synergy and T3, Digerati Technologies is assisting businesses that are seeking simple, flexible, and cost-effective communication solutions. These solutions include cloud PBX, cloud mobile, Internet broadband, SD-WAN, SIP trunking, and customized VoIP services. All of the Company’s services are delivered through its global carrier-grade network.
To build value for investors, Digerati is capitalizing on the wave of migration from traditional telephone lines to telephony provided via the cloud or Internet.
Synergy and T3 are Seeing Incredible Growth
The subsidiaries, Synergy Telecom and T3 Communications, were recently acquired by Digerati Technologies. In fact, the Company acquired Synergy in December of 2017, followed by the acquisition of T3 in May of 2018. While these are relatively newly acquired assets, we are already seeing impressive movement from both.
Since its acquisition of Synergy, Digerati Technologies has doubled the Company’s Texas-based revenues. This was done by adding a solid base of customers throughout Texas. The Company is currently providing services to municipalities like the cities of Rockport, Glenrose, Lake Worth, as well as others throughout the State. Moreover, the Company has established relationships with business clients like Texas Workforce Solutions, Becker Vineyards, Star Shuttle, the McNay Art Museum, and many others.
When the Company acquired T3, it combined the business with Synergy. This was an important move, as T3 is an established player in the VoIP and cloud communications industry. As a result of the business combination, a telephony operator that serves approximately 10,000 businesses in Florida and Texas was born. Today, the combined entity generates about $6.2 million in annual revenue and positive cash flow from operations.
A Compelling Opportunity in The Making
Digerati Technologies offers a compelling growth opportunity in the fact that it is bringing some structure to a highly-fragmented market. Today, the market is littered with regional VoIP/cloud communications providers with relatively low values.
The -Company plans to bring these providers together via acquisition. In fact, the recent acquisitions of Synergy and T3 serve as a foundation for this “consolidation” strategy. Essentially, the Company plans on acquiring providers that are currently generating between $2 million and $10 million in annual revenue while producing positive cash flow from operations.
In doing so, the Company will be able to create cost synergies that produce additional profits and improved returns. This is done through the integration of telecommunication infrastructure, back office systems, and network facilities.
A Local Touch That Challenges National Players
One key factor in the future growth of the Company has to do with a “local touch” that will likely disrupt national players like Ring Central, Vonage, and 8x8. In fact, some of the biggest problems in the industry come from big-box players like those mentioned above.
Ultimately, while Vonage, 8x8, and RingCentral have all done a good job of penetrating the market, they all seem to come with the same problems:
- Customer Support - The national players are known for offering poor customer support. This is largely due to the national scale at which the companies operate, giving them an inability to understand and tailor support to local markets. Ultimately, this is the leading cause of the high churn rates that we see among these larger players.
- Customization - Moreover, the large players on this field offer little to nothing when it comes to customization, as their services are tailored to large, enterprise customers, rather than SMBs. Only offering off-the-shelf solutions simply does not align well when targeting SMBs.
- Pricing - Finally, with a focus on the larger, enterprise customers, services offered by these players come at a relatively high price, often proving to be a turn off to smaller companies with smaller budgets.
Digerati is addressing all of these issues. The Company offers localized customer support that decreases churn rates. Moreover, the services that it provides through Synergy and T3 are highly customizable, giving SMBs more control over the VoIP/Cloud Communications services that they are using and the monthly bill that comes along with them. Finally, by offering customized options, the Company is able to provide highly competitive pricing structures that are more in line with what SMBs are seeking.
The Target Audience is a Vast One
Through Synergy and T3, Digerati is targeting a massive small to medium-sized business audience. In fact, it is estimated that 98% of all businesses in the United States fall into this category, forming the backbone of the country’s economy.
At the moment, there are approximately 27 million small to medium-sized businesses in the United States. This vast audience is perfect for Digerati, as they are typically unable to afford the comprehensive enterprise solutions that are offered by the incumbent telephone companies and national telco providers. These businesses typically must work with multiple providers for various cloud computing and telecommunications needs in order to fill a void or cure pain points.
Digerati is providing a solution for this issue. By offering highly customizable solutions at a price point that fits the small to medium-sized business audience, the Company is offering SMBs the opportunity to consolidate their services. Moreover, these issues have led to around 75% of SMBs not yet migrating to UCaaS or VoIP, creating a large audience for the Company that has a pressing need for its services.
Ultimately, this market fragmentation and the lack of availability of solutions tailored to SMBs is creating a market opportunity valued at around $26 billion in the United States. $15 billion of this opportunity has to do with the potential replacement market for legacy, on-premise phone systems. With the recent acquisitions of Synergy and T3, as well as the Company’s plans to further consolidate this fragmented space, the Company is positioned to take a large share of this market.
A Highly Experienced Management Team
The members of the Digerati management team are no strangers to the industry. In fact, the Company’s team is comprised of individuals with a solid history of leadership in the space. Combined, the management team has over 150 years of telecommunications industry experience, with more than 60 years of experience in public-company operations. The diverse skill set of the team includes sales, business development, engineering, operations, acquisitions and finance.
Plans to Up-list to A Primary Stock Exchange
Finally, Digerati’s corporate development plan includes up-listing to a primary stock exchange, creating an even more valuable opportunity for its investors. The Company has taken steps recently to meet the qualification requirements for the Nasdaq and NYSE American stock exchanges.
Final Thoughts
The term disruptive is commonly overused in the stock market. Just about every smaller company claims that it will be a disruptive player in its space. However, when it comes to Digerati Technologies, there is no other way to describe the Company’s potential. By consolidating a fragmented market, the Company is able to reduce costs, increase profitability, and provide a level of service that even the largest players in the space simply cannot match. With a strong management team, a large target market, and a track record of success in the telecommunications industry, Digerati Technologies is a Company with real potential to be a disruptive player in the VoIP and cloud communications marketplace.
Disclaimer:
Except for the historical information presented herein, matters discussed in this release contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance, or achievements expressed or implied by such statements. WFM, Inc. is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. For making specific investment decisions, readers should seek their own advice. For full disclosure, please visit: http://wwfinancial.com/legal-disclaimer/.
Contact:
WFM Communications
Phone: 954.360.9998
[email protected]
