Toople continues momentum with new five-year contract win

Toople (TOOP ) said ‘momentum continues’ for the business as it secures a new five-year contract to provide a unified telecoms solution to an unnamed specialist engineering firm.

The telecom service provider to UK SMEs said it will provide secure high speed/bandwidth and dedicated data connectivity supporting the firm's purpose-built premises to deliver a unified telecoms solution, which includes multiple mobile connections and additional sites.

While the contract value remains undisclosed, the UK-based client is said to have a global reach with subsidiaries in Europe and North America. The Group designs and manufactures mercury and LED UV curing systems for the printing, coating and converting industries.

Toople will provide critical high-speed secure data connectivity as the firm continues to supply equipment for use on many of the world's most advanced printing machines.

It will provide a 1Gb/1Gige secure data connection into the firm’s premises with 34 business mobile connections and an upgrade and redesign of another secure data connection to a further site, ‘substantially increasing bandwidth from 30MB to 100MB on a five year term.’

The firm holds a global customer base and is supported by a global network of agents and distributors, all of whom are expected to benefit from Toople’s enhanced technology. It also provides customer service and support, which will be facilitated by Toople's infrastructure.

Commenting on the contract win, Andy Hollingworth, CEO at Toople, said, "We are pleased that momentum at Toople continues, as we win new contracts and extend existing relationships.  We are very proud that this leading British engineering firm, and winner of a Queen's Award, has trusted us to partner with them to provide essential telecom solutions.

Toople will keep the firm connected with its international subsidiaries and numerous customers, agents and distributors as it continues to roll out its world class products, services and support.  This is another strong endorsement for our brand and service offering."

A great start to 2021 for TOOP investors as the Company continues to add more commercial customers with increasing pace. Whilst Toople’s longer-term outlook is largely underpinned by HM Government’s commitment to the rolling out of fibre telecommunication infrastructure to replace copper and upgrade the country’s network to 5G, positive newsflow and contract wins are expected to propel the shares higher. Shares in Toople have traded solidly at 0.8p over the past two weeks to open 5.99% higher at 0.087p this morning following the announcement.

Reason to Follow TOOP

The company completed its “transformational” acquisition of DMS Holdings (DMSL), a firm which provides unified communication services in the UK, back in February 2020. Toople believes DMSL will accelerate its own positive cash generation and drive profitability. 

The macro drivers for TOOPLE indicate structural growth opportunities across the SME Telecom markets. Its contract wins, and renewals point towards several compelling value propositions from the Company across broadband, mobile, and fixed line services.

Market Opportunity

In a recent trading update, Toople told investors that the macro drivers expected to precipitate substantial growth for the Group remain in place, particularly the UK government’s commitment to rolling out fibre telecommunication infrastructure to replace copper. 

The macro drivers expected to precipitate substantial growth for the Group are said to remain in place, namely HM Government's commitment to the rolling out of fibre telecommunication infrastructure to replace the legacy copper infrastructure by 2025 and ‘the necessary and ultimately unavoidable upgrade’ of the UK’s network from 4G to 5G. 

This forms part of the country’s efforts to upgrade its telecoms system to full fibre lines to deliver “gigabit speeds” following concerns that the UK has fallen behind other countries. The UK government aims for full-fibre networks to cover the entire country by 2033. 

Openreach, which controls the UK’s telecoms infrastructure, is building full-fibre to over 4.5 million premises by the end of March 2021 and more than 20 million in the late 2020's. 

Andy Hollingworth, CEO of Toople said this goal coupled with the impact of COVID-19 is driving the need for better remote connectivity and unified communications solutions. 

“As full-fibre availability in the UK grows exponentially, our suite of services supports the transition to a full-fibre future and as the availability of fibre increases, so too will the number of new and expanded contracts for Toople,” he commented. 

He highlighted the significance of this accessibility in a “new reality where employees can work from anywhere but must remain seamlessly connected to their colleagues and clients.” And said “In light of societal changes to working practices, and technical upgrades to the UK's communications infrastructure, the long-term outlook for Toople is bright."

Strong Balance Sheet

Toople’s balance sheet will provide management greater flexibility to target additional organic growth opportunities across their target markets, which should lead to a positive outturn for FY20 and accelerate the Company’s path to profitability and positive cash flow in FY21.