Question: What will the token (alias share) be worth in a couple of years?
Answer: Of course this is a lot of guesswork. But in comparison to lots of ICO companies who have a totally new idea and hope to become the next Google or Facebook, things in our area are a bit more realistically predictable because we have a prooven business case. There are many telcos out there today who serve customers with Internet. All over the world. So we can check out how they are valuated today on the stockmarket.
For telecom companies, the EBITA value is the key value to look at. (see also
http://www.investopedia.com/articles/fundamental-analysis/09/analyzing-telecom-stocks.asp)
For example I take AT&T USA. AT&T trades at 37.37$ per share currently and has 6.140 billion shares . So the stockmarket basically says AT&T's value is roughtly 229 Billion dollars. Their EBITA figure on the last annual report is 28.9B$. This means AT&T is valued at a factor of roughly 8x EBITA. Other telecom companies have similar values up to 20x EBITA. EBITA is a good figure to compare companies in a well established market.
There is however more than just the EBITA. Key other factors are:
• Can the company grow or has it reached a saturatio point?
In a market where everybody has a computer and a fiber to the home, its much much
harder to connect new customers as it basically means taking a customer away from
a competitor. Its a hell of a lot easier to get a new customer who never had internet
ever before and unless you screw up, he will be resistant to go to your competitor
unless he has very good arguments. Saving 10% wont do the hassle of changing ISP.
• Can the company make revenue from these customers?
If you provide everything for free, this is a good question. If you look at totally
overvaluated companies such as Facebook, you can ask yourself that question. having
a lot of customers is nice but unless you can turn this into real money, its just a
burden.
In the case of AT&T and other telcos in the US, its obvious that they are simply competing against each other. Everybody in the country more or less has access to the internet. So in total you can not sell more internet subscriptions than the population of the country. This means if ISP A gains a customer, ISP B looses one. And to not have this happening, ISP B will do whatever he can to keep the customer. This means lowering the price, give other insentives to stay, offer more services. These are advertizement costs in some sense and are a high expense.
If you now go to the market where we are operating in, we pick up brand new customers. Customers who have never seen the internet ever before. You don't have to convince them that your offer is better than the competitors offer. You have to convince them that the internet is something useful. And this is much much easier because their friend who
discover the internet will be excited and do the advertizement for you.
Now coming back full circle to what is the value of a Cajutel token/share in 5 years, we all can only guess. It depends on the buyer who at the end buys your share on how he values the company. If we tak the conservative 8x EBITA figure from AT&T, we end up with 550M$ or 309$ per share. The businessplan presumes we have a 10% market share by then which is quite a pessimistic estimate due to the fact that it took GSM to go from 0%(2003) to 100%(2013) of market about 10 years. What happens if we reach 20% of market share?, the value of the company would more or less be double. Now the additional points in the valuation both play in our favour. The company is not in a saturated market which means its much easier to gro and we make direct revenues from customers on day one and have the potential to sell other services lateron to the same customers as well (IPTV for example). This could mean that investors could work with a 15x-20x EBITA figure evaluationg Cajutel which doul mean the company could climb to 2.7 billion or 1'500$ per share. Compared to the initial investment this is a factor of 100x!
The other side of the coin. What if things go wrong? Lets assume we build this stuff and fail to get customers. Well the company still owns a lot of equipment. Towwers, fibers etc. This is value which is not destroyed when the company would close. It would be assets
sold to the next buyer. This is a 151M$ in the books in year 5. So even if it sells for 60% of its book value, there's still 100M$ to share amongst the shareholders. Thats 56$ per share.
So one could say a 15$ investment of today could end up in a value of around 56$ to 1500$ within 5 years. Only time will tell. And of course while you are holding the token you get dividend. Year after year after year.
Andreas Fink
CEO & Founder
Cajutel
