SOL contract provides revenue visibility for TV2U
TV2U International Ltd (ASX: TV2) has provided further details regarding a contract which was negotiated with SOL Telecom in February.
When the contract was first announced, TV2’s shares spiked 50%, and there has been a substantial reaction to the news released today with the company’s share price surging nearly 17% in the first 30 minutes of trading. TV2’s share price has now increased nearly 200% in less than a month.
It should be noted that share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
With regard to the initial announcement, it involved TV2 providing technology, know-how and access to content in return for management, integration and service fees in relation to the installation of TV2 technology in Brazil.
Importantly, the two parties had worked closely prior to the contract being negotiated and SOL is the first customer for TV2’s new OTT (over the top content) platform. OTT is industry terminology for the transmission of audio, video and other media transmitted via the Internet without an operator of multiple cable or direct broadcast satellite television systems controlling or distributing content.
Building on previous news, TV2 advised that services, which are expected to launch by no later than July 2017, will provide a white label solution to the Brazilian OTT market, with SOL taking the lead and enabling a footprint for other OTT operators to follow.
By way of a contract amendment, the commercial agreement now guarantees a minimum number of 25 OTT operators using the platform, bringing an aggregated total of not less than 125,000 subscribers per year within the first year of commercial operations.
Contract provides recurring revenue visibility
Highlighting the significance of this development from an operational perspective, TV2 Chairman Nick Fitzgerald said, “Operations are already underway, with tests being carried out by SOL to potentially service more than 200 live TV channels”.
Fitzgerald highlighted that these will all be available within the region and each operator will be able to choose the number of channels and brands that they wish to offer to their subscriber base.
Importantly, TV2U fleshed out the potential impact on revenues, saying that the group will earn a monthly fee for each subscriber and the estimated 125,000 will generate substantial income for the company.
SOL Chief Executive, Janio Cesar de Medeiros noted that the number of ISPs alone in Brazil totals around 4000 and having an ‘open standards’ platform enables his company to facilitate many relationships for service uptake as a result of having a managed service partner in TV2U.
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