Redknee still has double-digit upside, says Cantor Fitzgerald Canada

Redknee’s (TSX:RKN) most recent deal underscores the organic growth opportunities it acquired through its company-changing pickup of assets from Nokia Siemens Networks, says Cantor Fitzgerald analyst Justin Kew.

This morning, Redknee announced a $9-million order from an unnamed tier-one operator in the Asia-Pacific region. The company says its billing, charging, policy management and customer care solutions will allow the client to better serve and monetize its 35-million mobile subscribers.

CEO Lucas Skoczkowski commented on the deal.

“This multimillion-dollar agreement with a Tier 1 service provider emphasizes Redknee’s ability to support our customers with innovative solutions to enable their LTE rollout,” he said. “As an increasing number of subscribers migrate to LTE services, we see the opportunity to further grow with this customer as they expand Redknee software licences. Furthermore, the Asia-Pacific region is projected as having the highest adoption of data services and fastest LTE migration, which presents a great growth opportunity for Redknee to expand the presence of our integrated charging, billing, policy management and customer care platform. Redknee supports over 200 service providers from around the world and will continue to invest in our real-time software to advance our position as the provider of choice for monetization and subscriber management solutions.”

Noting that the order comes from an existing customer, Kew says the impact of this agreement is “marginally positive”. But taken together with February’s $6 million contract win with Telekom Austria, a $50-million deal announced in January and two upgrade deals each worth north of $10-million announced last December, the deal is further evidence that Redknee is executing on the organic growth opportunity inherent in Nokia Siemens Networks’ customer base, he says.

In a research update to clients this morning, Kew maintained his “Buy” recommendation and $7.75 one-year target on Redknee. The target implied a 44% return at the time of publication.

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