The story gets better and better! Mark, let's use your 4x revenues figure, I like that, because we don't have to guess on costs, and is an average for the industry. I suspect DGIV's costs are much less than industry average, but I like to be conservative, so let's use that.
We have 110 Million minutes retailing for between $.90 to $1.40 in the United States, and US$2.20 to Egyptian customers. Let's split the difference, since for every caller in the US or Egypt there is probably a caller on the other end. So the average is about $1.70 per minute. Times 110 million minutes, that's $187M $ per year! Now, how much does Digitcom get? Since it is a joint venture, I think a 50/50 split is possible, which would give Digitcom around $45M per year in revenues. At a 4 to 1 price to revenues ratio, that makes this around a $10 stock when the revs roll in, just on this contract! And if Digitcom's costs are one-half of the industry average (I suspect they are at least that), then this is a $20 stock based on equivalent p/e ratios!
Now crank in the Russian deal, the Indonesian deal, the German deal, and if they are worth the same as the Egyptian deal in revs, we are up to a $40 stock. And that does not include all of the other countries that between now and then will be announced, countries that we know they are in advanced negotiations with but have not yet closed the deal.
I always hesitate to make these projections, because we can be accused of "hype," but estimates such as these are precisely what the analysts will do when they value Digitcom and decided whether to take a position. The difference is that they will use hard, audited numbers from the SB-10 and from the contracts themselves, whereas we have to base our analysis on the information we have available to us. On the other hand, we are rewarded greatly by being able to buy into a company with these huge potential revenues at a fire sale price of under three bucks, even less for some investors.
Disclaimer: These are just my own back of the envelope estimates, and by no means should anyone use this to buy, sell, or hold Digitcom or any other stock. If anyone disagrees with my estimates, please use your own envelope and do your own estimates. |
