Analysis: Here’s why WebCentral shares are up more than 300pc since the 5GN acquisition
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The company’s strategic turnaround is only just getting started.
With some extra capital support and a complementary offering to 5GN’s fast-growing data infrastructure business, WCG is building momentum and investors are starting to take notice.
Since the acquisition closed on 10 November 2020, shares in WCG have surged above 70c – a gain of more than 340pc from its pre-transaction trading levels.
In light of those gains, 5GN Chief Marketing Officer Glenn Flower provided a breakdown of the recent capital markets activity, as well the operational efficiencies underpinning those gains.
For starters, Flower highlighted that the 5GN acquisition has allowed WCG to execute on its strategic goal to build out an Australia-based customer service team.
“We’re filling out more than 30 roles across Sydney and Melbourne, and we’re about two-thirds of the way through that process,” Flower said.
And the early response from WCG’s customer base has been “fantastic”.
“We’re closing issues a lot faster and there’s been a lot more clarity in terms of customer understanding, so as a result the feedback’s been very positive,” he said.
More broadly, companies are benefiting from WebCentral’s extensive distribution across SMEs – a key market for 5GN as it expands out from its enterprise client base.
“From 5GN’s perspective, WebCentral has this network of 330,000 SME customers,” Flower said. “So we’ve been identifying solutions to drive into that customer base.”
“For us, that has sped up our go-to-market strategy no end because we’ve got this expanded network we can really address quickly.”
On the flipside, WCG now has access to 5GN’s market-leading infrastructure network that allows it to expand the digital services offerings.
WCG is already “well on the way in terms of migration from the public cloud to a market leading private cloud from 5GN ”, Flower said.
Ultimately, WebCentral can now leverage an enterprise-architected service stack for SME customers, at an SME price, he added.
“We can integrate that end-to-end stack spanning direct access to the data centre, with infrastructure connectivity and security,” Flower said.
“So in this context, our SME customers can enjoy an end-to-end solution that’s typically only available to the enterprise market.”
Assessing the outlook for the combined group, Flower said WCG will have plenty of updates for investors coming into the middle of the year.
Along with streamlined product offerings under a new combined brand, a key operational focus for the company is flexibility.
“One of the key initiatives for us is to move towards real-time delivery of services based on what the customer wants to do,” Flower said.
That could include building a website, running productivity applications through Microsoft or hosting a website.
“We’ve got a number of active projects underway to make the service seamless and intuitive, and the market will see evidence of that in early July,” Flower said.
And it’s all flowed through to a notable shift in market sentiment among sophisticated investors, he added.
“If you look at our April numbers, yes the share price is rising but what’s also clear is that (WCG) trading volumes are starting to lift,” Flower said. It’s a shift he put down to “a couple of factors”.
“A number of sellers have now transitioned out of the market, and now we’re finding in terms of trading activity and conversations at board level is there’s a lot more interest from institutional investors,” he said.
“They really like the growth story and the market opportunity we’ve identified, and that’s starting to drive those larger volumes where we see upward pressure on the share price.”
This article was developed in collaboration with WebCentral, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.