Analysts at 'house' broker Shore Capital have lauded the news that BATM Advanced Communications Ltd (LSE:BVC) has signed a formal contract with CityFibre (AIM:CFHL) for the roll-out of the Edgility virtual networking and edge computing solution.
In a note to clients, the City broker's analysts said: "We believe that this partnership model, commercialising Edgility, is ultimately set to be repeated with other potential network providers in the UK and worldwide."
BATM’s initial announcement of July 11, 2022, detailed CityFibre (AIM:CFHL) piloting the Edgility platform to test onboarding and in-life journeys for CityFibre's client partners. Alongside the piloting project - that continues to gather insight to support the national roll-out - CityFibre is now proceeding to a scaled national roll-out of the platform.
CityFibre has placed an initial order expected to be worth US$3.5m. BATM said it expects this order to be rapidly followed by a substantial expansion in deployments as CityFibre rolls out Edgility to its full network in coming years.
BATM will receive recurring licence fees for a five-year period with some hardware sales - together estimated at US$3.5mln. The group expects the number of endpoint deployments with CityFibre’s clients to rapidly expand to tens of thousands per year and believes the financial value of this partnership to the BATM will grow substantially in the near-term as the volume of licences increases beyond the initial contract value.
The ShoreCap analysts noted that CityFibre represents a further strong reference client for BATM with this disruptive technology solution.
They said: "Whilst the initial revenues are modest from this contract, with the revenue acceleration currently assumed in our model, we see this development as evidence of the momentum within BATM and in the Networking operations in particular. We look forward to further similar announcements from BATM in due course."
The analysts concluded: "We continue to observe that BATM is delivering strong progress across the development of its technologies and Group operations. BATM presents a profitable high growth opportunity to investors across a span of technologies, these moving towards potential market inflection points. As underlying progress continues towards commercialisation, positive operating leverage to reported results should be expected."