Download the Prospectus
Pre Money Equity Valuation
$43,332,484
Min Raise
$22,460,000
Max Raise
$22,460,000
Estimated Close
2020-12-22
Issue Type
IPO
Lead Manager
Euroz Hartleys
Type of Securities
Shares
Date First Lodged
11/12/2020
Offer Costs $
$1,450,000
Market Cap Max
$65,792,484
Key Executives
David Buckingham (NEC), Stephen Cornish (MD), Timothy Cornish (ED), Craig Amos (NED), Dalton Gooding (NED)
Company Address
2/8 Corbusier Place Balcatta WA 6021
Exchange
ASX
Chairman's Letter

Dear Investor,
On behalf of the Board, I am pleased to present this Prospectus and to invite you to
become a shareholder in Pentanet Limited.
Pentanet is one of the fastest growing Internet Service Providers in Australia, delivering
high-bandwidth internet services with an emphasis on local service and support and
excellent customer experience. We grew our subscribers by 218% in the last 12 months and
have seen these growth rates continue in the last three months. The Company began life
in Perth, has been growing rapidly in Western Australia, and is now firmly positioned to
extend its growth through the expansion of the Company’s current wireless footprint in
greater Perth and implementation of future wireless technology, as well as the commercial
launch of the GeForce NOW cloud gaming service in Australia pursuant to its Alliance
Partner Agreement with NVIDIA.
The deployment of the National Broadband Network (NBN) has transformed the industry
and the provision of internet services in Australia. It has removed prohibitive infrastructure
barriers to entry and created a level playing field where new and agile service providers
can compete with traditional large telcos on customer experience. It has however locked
most of these service providers into thin margins limiting their ability to afford growing
bandwidth demands and with a fixed cost per customer as they resell the NBN. Pentanet
on the other hand, uses its strategically located and developed own infrastructure to
offer both a superior customer experience and a fixed-wireless product that is technically
superior to most of the NBN – with healthy margins.
The multi-technology nature of the NBN has also resulted in an inconsistent service
delivery, with approximately 20%1
of Australian users only having access to speeds above
50Mbps. This is a tremendous opportunity for Pentanet, and the Company has not wasted
any time in deploying its own high-bandwidth fixed-wireless network, and migrating
customers from off-net third-party networks, to on-net infrastructure. Pentanet “onnet” customers on our own fixed-wireless infrastructure have a monthly ARPU of $87,
compared with “off-net” customers serviced via the NBN with an ARPU of $81. Our “on-net”
customers also have a far superior gross profit margin of 68%, against 4% for NBN serviced
customers.
For our customers, this allows us to better manage plan capacity and the delivery of
services, resulting in lower churn and high referral rates. We do not have to “pass the
buck” between ourselves and the NBN. This means greater profitability per customer for
our Shareholders as we do not rely solely on reselling the NBN, greater life-time value of
customers, and higher returns on investment.
To further power this growth, we plan to roll out next-generation fixed-wireless technology,
developed by Facebook called Terragraph, which will enable us to offer both higher
speed plans and allow us to serve more customers “on-net” rather than via the NBN. The
Terragraph technology allows us to join households with line of sight to our towers and
join households without line of sight to our towers using the innovative mesh network of
Terragraph. Unlike expensive mobile phone 5G network rollouts, this technology does not
require spectrum licensing.
Complementary to our ISP business, we have also been able to secure a unique
opportunity to be part of the rollout of the next wave of subscription-based entertainment
services – cloud gaming. Our Alliance Partner Agreement with NVIDIA – one of the world’s
largest producers of specialised graphic chips used in gaming – allows the Company to
be the first to bring their GFN technology to Australia. GeForce NOW instantly transforms
nearly any laptop, desktop, Mac or Android mobile device into a high-end PC by allowing
the streaming of output to a monitor. This will allow users to instantly play the most
demanding PC games and seamlessly play across devices without the need for expensive
hardware systems. We see great potential for recurring subscription based revenues from
this product, and obvious synergies with the Pentanet telecommunications network.
Pentanet will be able to provide its customers with a unique and modern bundled content
offering, much the same as other ISPs provide through secured content deals with partners
such as Kayo, the Premier League or Fetch TV.
The Company is seeking to raise $22,460,000 (before costs) through the issue of
89,840,000 Shares at a price of $0.25 per Share, pursuant to the IPO Offer.
Euroz Hartleys Securities Limited has been appointed to act as the Lead Manager and
Underwriter to the IPO Offer. The IPO Offer is fully underwritten.
The proceeds of the IPO Offer will be utilised towards:
1. expanding the Company’s wireless and network infrastructure;
2. NVIDIA cloud gaming infrastructure;
3. working capital and administration; and
4. the costs of the Offers.
This Prospectus contains detailed information about the IPO Offer and the current and
proposed operations of the Company, as well as the risks pertaining to an investment in
the Company. Potential investors in the Company should carefully consider those risks
(detailed in Section 4).
In addition to the IPO Offer, this Prospectus is also being issued to make the Employee
Offer (see Section 1.5 for further details). The Offers contained in this Prospectus are
conditional on the events outlined in Section 1.6 occurring. If these events do not occur,
the Offers will not proceed and investors will be refunded their Application Monies without
interest.
I encourage you to read this Prospectus in its entirety to gain a full understanding of the
Company’s operations before making an investment decision.
On behalf of the Directors, I invite you to consider this opportunity to invest in the
Company and look forward to welcoming you as a Shareholder.
Yours faithfully
David Buckingham
Non-Executive Chairman
Pentanet Limited