LTE AGM report (posted from Twitter)Here's a very detailed report of what Mike Plotnikoff and LTE is up to. Thanks to Tom Fedichin @mrjones321 on Twitter. If you want to see the report with all the pretty pictures along w/ many other comments and reports on Lite Access check out Twitter.
When we achieve profitabiiity is mainly dependent on timing of achieving the tier one status with Virgin in the UK, sigining of contracts and completion of the work. There is still over 3 million premises to pass with fibre optic cable in the UK per Virgin's Project Lighting. LTE is the only microtrencher in the UK and they are capable of installing up to five times and six times faster than traditonal methods.
If you are an LTE long you are going to like this report a lot. I do think that profitability in Q1 next year is on the aggressive side, given that Q1 starts on Oct 1, 2017 and we still don't have tier one! But I do not think there is anyone at LTE who doesn't beleive that 2017/18 will the year that smashes their previous best year. And that 2018/19 is the year where things really get interesting.
Lite Access AGM Update
Topdog | Tom Fedichin | June 18th
This report has been put together by Tom Fedichin aka Topdog who has continued to buy stock of Lite Access since going public. This information is for your own personal enjoyment and should not be considered investment advice. Do your own due diligence. I will summarize below all the information that I took as being the most important from the LTE Annual General Meeting.
ABOUT LITE ACCESS:
Lite Access:
Lite Access is a world leader in Microduct and fibre optic technologies. Using its specially designed and innovative micro / narrow trench and alternate methods of deployment, Lite Access' proprietary Microduct technology extends a network provider's ability to deliver true broadband connectivity directly to end-users, such as homes, government and educational institutions, and emergency response facilities. Providing a full portfolio of fibre connectivity solutions for many types of Telecom infrastructure, Lite Access has successfully deployed or enabled deployment of thousands of kilometres of Microduct networks throughout North and South America, South Africa, the United Kingdom, the Caribbean, Australia and Asia.
Western Canada
-LTE has expanded its presence further into central Canada. The company has been getting a lot of interest from many underserved communities. With the Canadian federal governments now spending money there are many opportunities popping up.
-Many communities who were promised deployments by the large and slow to respond telco’s are now going it alone. Look for more announcements in this space moving forward. MISA (Municipal conference for BC/Alberta/Ontario) has helped LTE to garner a lot of prospective work. Lite Access is an active member and helps sponsor MISA(Municipal Information Systems Association).
-New Westminster has gone better than anyone would have expected. LTE’s deployment using their new Narrow trenching(wider/deeper micro trenching) was used for the first time in Canada here. It has opened everyone’s eyes on how effective and fast this process can work. NW has now rewritten their handbook on what is acceptable for future deployments in their city. The initial NW contract was handed to a competitor which has failed so far miserably. This company is late/behind and has not deployed what has been asked so far. LTE with their recently awarded NW contract on the other hand have proven their new technology works faster and more effectively. Management is hoping cities in BC and elsewhere in Canada adopt a bonding process. If a company bids on a project you need to put up money in advance. If your project doesn’t get completed on time or up to standard the contractor will lose their money. Currently the lowest bid wins due to funding provided by local taxpayer money.
-Lite Access is ramping up locally. The company has close to 30 staff members now in Langley and will be moving to a larger facility in the not so distant future. LTE is also hiring staff as the operations are ramping up locally. There has been a lot of interest on Vancouver Island, Interior region and in the Kootenay’s/Alberta. They have already outgrown the new current facility. They also have an off site where they store their equipment and trucks.
-LTE worked last year in Haida Gwaii and completed the first phase. LTE is hopeful that there could be future work for the second phase which is planned and funded for by various levels of government. Management is hopeful on numerous projects of this size and scope in Canada. Now that the Canadian federal government is spending on broadband initiatives there will be many opportunities.
-Staff at the Lite Access Canadian operations all have the highest safety standards in the industry. Training is important. They are now COR certified which is the highest certification in the province and recently achieved 96% on the last set of tests(BCCSA- average percentage achieved by companies 88%)
-Canadian Operations:
-LTE is much more organized today than they were a year ago. With more staff comes a higher need to individualize roles. CEO Mike Plotnikoff has hired more staff to take on the day to day responsibilities so that both he and Michael Priest can focus on growing sales and building on partnership relations. Look for a continued focus on building out new partnership relationships.
-Branding: Lite Access is in the midst of a major overhaul with regards to branding. You will see a new interactive website coming within the next few weeks. First it will start off as an updated old website and then the new website will be brought in within 2 months. Videos will show off the Lite Access way of deployment, products and service options. You will also see a change with marketing on all vehicles. Management wants more than just a symbol on each vehicle. You will see vehicles displaying pictures such as the banner posted above. This will help to educate the public and enterprise of what LTE is all about.
Communication: Management has realized they need to do a better job of communicating. They have focused so much on growing their business that unfortunately they have overlooked keeping shareholders updated. They promise to put out an update of the current operations locally and abroad. They are working on addressing how they can put out regular updates in the UK as well. Maybe houses passed or meters deployed metrics.
South Africa:
-Brite Access has made significant changes in their FTTH deployment in Johannesburg and Victoria South Africa. They were hiring contractors to deploy which turned out to be way too slow. Ettienne Knipe and his team from Brite Access have done a very good job of rectifying this problem and by building out their own teams. They currently have 6-7 teams working deploying fibre and we should expect orders to start rising again. From all indications things are back on track again with new orders starting to flow in again.
Newer products such as Lite X Tend are in the works for markets here in North America and abroad.
UK Operations:
Staffing in the UK currently sits at 62 staff members plus necessary contractors hired to provide backfilling services.
-Dylan Griffiths has trained 5-6 crew teams to deploy fibre. They are all cross trained to build FTTP(fiber to the premise) and to deploy on the trunk(backbone). The crews are all overstaffed right now as they want to be able to ramp up quickly once staff are fully trained.
-Currently LTE is only passing homes. They are not directly connecting each home however 3-4 crew are now trained to connect homes.
-Trunk work(backbone) has a few miles left to go until its completed. Most of this work Dylan expects to do. Once network is built then lighting up network can start.
-Expect to have 150 staff to 200 staff by next year. They are on target for all of their goals set out so far.
-Currently they bus staff from site to site as needed. If new work comes elsewhere they will set up satellite offices. Wrexham will remain the central hub.
-Virgin Media’s team of supervisors come by LTE sites quite often to view progress. The “Lite Access Way” has been coined as the success has been off the charts. There has been no issues whatsoever. The successful start in deploying has led to major support from regional MP Ian Lucas who has put his stamp of approval on the company. He is helping to open more doors and to reduce regulations that hinder LTE. The success so far is helping with reducing red tape/restrictions so the longer they go with no issues the easier it becomes.
-Virgin and Actavo asked LTE to do the test in Ireland. This test was supported by Virgin and Actavo as well as two other firms watched Dylan deploy. LTE currently has no plans to deploy fibre in Ireland. “Never say never” Dylan says but for now he wants to focus on the UK.
-Currently regulations and permitting processes designed for conventional deployments are under investigation and change. The reasoning is that LTE can accomplish more effective and faster deployments using its proven narrow trench deployment technology. Ian Lucas has helped to try to get this regional council to change and fortunately change is in the works. Other jurisdictions don’t have the same rules. York for example want fibre so bad that there are no restrictions. Management believes that once one area experiences the “incredible LTE difference”, it is expected others will be quick to follow. Simply put when you deploy with no issues and you are moving faster than everyone else people take notice.
-Currently homes are spread apart on average of 8-10meters apart. The cutting crews are done work by 9:30am as the saws cut so fast. The backfilling actually takes the most time. Interestingly enough its faster to resurface a narrow trenched LTE trench than one of their more narrow micro trenches.
-Mike Plotnikoff states the next quarter will see a very nice improvement in Q over Q sales. Look to Q1 of 2018 to start to see the profits start to hit the bottom line. For now its all about growth in the UK. They should be self funding at this stage.
Picture of Dylan Griffiths standing beside Ian Lucas at new office opened in Wrexham.
-Cormark visited the UK two weeks ago and had a full run down of the LTE operations. Management feels a report could be out soon. This is up to Cormark as to when they would put it out.
-Haywood visited the UK as well and were first to put out a report. It should be noted that they were present at the AGM as well.
-Management is considering selling attachment heads which they have exclusive rights on into the UK market. It’s impossible for them to handle all of the demanded work there. They are looking at their options on how they can best monetize this.
-They are currently in talks with several large companies regarding tier 1 partnerships. For now LTE is showing off the best practices for deploying fibre without any issues. The longer LTE goes without any issues the more compelling LTE becomes at being the method of choice or as Dylan Griffiths says “The Lite Access Way”. They are confident in Tier 1 for but now its all about just working and getting it done. Tier 1 will work itself out.
-UK operational updates: Management is big on making sure that the communication with councils are always open and ongoing. Dylan has carried many hats from hiring, deploying and to communicating. They will be hiring a communications officer to help keep councils aware of the ongoing efforts of LTE as well as concerns etc.
-Dylan has also hired a two key individuals; both with greater than 30 years experience each in the telecommunications industry allowing Dylan to focus on selling new projects and overseeing immediate needs such as hiring etc.
-Hiring has not been an issue as Dylan has a lot of connections from his BT days. LTE UK pays 1-2 Pounds more per hour as well as company ownership thru stock options. This has brought in a lot more guys who of course want to be paid better money. Management in the UK also get stock options and as a result are extremely committed to the success of the company.
-LTE has not signed any exclusivity agreements. LTE has been asked by many majors without naming names. They have also been asked by other installers who work for Virgin Media. LTE will make decisions based on what is right for them as a company however they also don’t want to burn any bridges.
-Currently Wrexham/Chester has 120,000 homes earmarked for fibre deployment. This number will rise as more permits come back in. There are only two contractors working in this region with LTE being the go to company working for Actavo.
-There used to be 5-6 crews deploying in Wrexham/Chester and now they are down to just 2 companies.
-Tier 1 means: Hiring more contractors and watching over them. Making up to 20% more than the current rate but creating more involvement of planning with townships and permitting processes. The Tier 1 will also be responsible for the engineering work and obtaining of permits which can take up to 6 weeks.
Competitive advantage:
-Lite Access has had to teach the market that there is another way. “The Lite Access way.” They continually change their methodology. From saw blades to angles of cuts to rear
cutter or front cutter. All trying to further change that will make the entire process more effective and efficient. The changes are always ongoing.
-Products: Lite Access has developed many prototypes over the years for conduit. Emtelle currently makes their conduit for them and supplies them with fibre. Interestingly enough there is a major fibre shortage on the market. Corning supplies most of the worlds fibre. Currently you can wait up to 6 or more months for a competitors conduit product with fibre. Meanwhile LTE can deliver within 1 week if in stock or 4 weeks if they have to order it in from Emtelle. LTE’s conduit doesn’t kink or melt after deployment where as there has been many issues with the competition. As well LTE has made it very simple to find their product after installation with a unique fibre identifier built into the conduit for easy identification. I don’t want to mention what/how for competitive reasons.
Cutting equipment: LTE has obtained the rights to their cutting equipment. They are looking at marketing these products out to others providing they buy LTE conduit from end to end only. This is why its important to work with the right partners only. Look for some deals to come out of the US as the US is heating up. Also look for new deals out of eastern Canada. A new machine- first ever in Canada arrives in the next short while. Stay tuned for an announcement.
-Narrow trencher: Has garnered interest from Utilities companies for electrical/gas/water line deployments. Currently the method of choice has been a backhoe and larger construction equipment; as well as the high associated costs. Now that LTE has shown the market the cost and time savings the market is showing an interest. Nobody on the market has this type of cutter. Lite Access has created a new technology which is displacing the FTTH industry and potentially others.
-Quick Connect fibre: LTE has been working on newer products for quick connection. In fact, the team has been working hard on the creation of a new product line similar to Lite X Tend. I cannot say much more other than this is another market displacer. The cost savings will be immense. They continue to innovate.
Management and directors:
LTE has been focused on growth and has hired new directors to help achieve these results. Bringing in Steven King an ex Emtelle director was a major win for Lite Access. Also having Kevin Smith onboard has strengthened the company. Management feels strongly that these new additions will help continue to the positive momentum forward. Steven has already helped LTE win work in Panama(contract posted by LTE months back).
With the recent addition of a seasoned US Sales VP, LTE is working very hard on getting US contracts. It sounds as though we can expect to see work emerge from here as there are a lot of things on the go. Expect to see more news from the US this year as the deal flow is looking very strong.
We spoke about David Toyoda a director doing some insider selling and they admit the optics didn’t look good. They have spoken to David about this and he understands. David had some personal things to deal with so he had to sell however we shouldn’t see anymore of this. I personally spoke with David and told him about the optics of this. This shouldn’t be overblown. He sold months ago and everyone has things in life to deal with. I think it’s safe to say this is behind everyone.
Management wants to update the shareholders. Expect to see a full update out very soon. They also want people to know they will update on a more regular basis news of substance. They have been so focused on work that maybe they have overlooked the shareholders more than they would have liked. They have identified their mistake and will be trying to be more transparent.
Conclusion:
Lite Access is an amazing success story. This is a company which is displacing not just how fibre is laid but also the products involved. This company in a very short period of time has tackled Haida Gwaii and showed how fast work can get done efficiently and cost effectively. They have then gone to the UK and showed the UK how to deploy fibre without all the troubles other vendors have encountered. It has taken awhile to prove out but finally it is now really starting to bear fruit. MP Ian Lucas has opened doors and is supporting LTE as the contractor of choice for all vendors there. In 7 months this has all happened. What will happen over the next 6 months? Tier 1 more than likely with a lot more work.
I like to compare Lite Access to making a good stew. You don’t just throw all the ingredients into a pot and pull it out and serve it. You need to let it cook a bit. Add some spice and stir. Lite Access has been doing just this. They are well on their way at proving out the Lite Access way of doing business both in the UK and here at home. Its now just a matter of time before the dam breaks and we see more contracts. I will say upon going to the AGM I had a bit of anger with the share price and I wanted answers. I asked more questions than most guys would want to hear. Mike Plotnikoff, Michael Priest and Dylan Griffiths were fantastic in taking as much time(4 hours) with us in hearing us out. I am more confident than ever in LTE’s future.
Lastly a very important point to make. Lite Access has completed what they have set out to do thus far in the UK. They are fully on track. That being said the share price has pulled back to below the PP price of $2.25 financing. The last time we were at these prices was late last year at a time when we only had around 10 plus guys in the UK. Today we have 62 people working plus contractors in the UK alone. Locally we have close to 30. We will be reaching a major company milestone very soon of 100 staff members very soon and the stock market has not recognized the fact that this company is moving forward and is accomplishing the laid out goals. The target is on track for q1 2018 to be a quarter where LTE is now self funding and the profits will start showing on the bottom line. Today you are buying a company that is much futher ahead in their expansion plans at a much better price than it once was. I am a very strong believer in the Lite Access story.
For disclosure I am a long time Lite Access shareholder. I love the story and I believe in what management has done so far. I hope this report triggers conversation. Feel free to share any of this information in this report with others. As well feel free to fact check with management if you need to.
This is my opionion now and mine only. This report was made by Tom Fedichin only. Please do your own due diligence and do not use this information as investment advice. Any information obtained here should be fact checked on your own. Please enjoy some pictures below of the hard working staff at Lite Access.
New Westminster narrow trench team.
Quick and clean installation – narrow trench – 5” wide x 24 inches deep in New Westminster B.C.
New Product designed for high bandwidth (large fibre count) installation
Project Team
Fibre Installation.
Fibre Splicing.