It looks like Verizon (NYSE:VZ) is picking up AT&T’s (NYSE:T) fumble of the Elephant Talk Communications (NYSE MKT: ETAK) ball after AT&T paid out ETAK $13.5 million to close down its contract with Mexican wireless company Iusacell (now AT&T Mexico). With software-defined network architecture and cybersecurity solutions provider ETAK now in the running to be the vendor for Verizon Partner Solutions, it’s clear that ETAK hasn’t missed a beat. A new Master Service Agreement with Verizon could be right around the corner for the company and the increasingly competitive nature of the telecom sector is brilliantly illustrated by Verizon scalping AT&T here, investing in a distributed architecture solution that can seamlessly provide users with bleeding-edge content delivery solutions.
The formation by ETAK of a special committee to explore JV, merger and strategic disposition alterations of its wholly-owned transaction cybersecurity solutions subsidiary, ValidSoft, speaks volumes here. Also, the news that ValidSoft has already quickly gone live with two UK banks, leveraging a device trust partnership with renowned consumer credit risk and analytics software company Fair Isaac Corporation (NYSE: FICO) to deploy a solution using ValidSoft’s International Proximity Correlation capability, shows how attractive the company’s position is.
Application of the $13.5 million picked up on the Iusacell split has helped ETAK trim the fat too, allowing the company to eliminate debt overhang and giving it the procedural leeway to pull the trigger on corporate restructuring efforts that should reduce G&A costs by $5 million within this year alone. The share price has been climbing steadily since early this month and Friday’s spike to $0.63, a 75 percent jump, underscores the 50 percent gain since the start of the month so far. This is a fierce counter to the undervalued price point most analysts say the shares have seen since February. Notably, research firm Zacks just rated ETAK a short term strong buy and the company is making all the right moves to impress investors.
In fact, one big part of the company’s decision to get more aggressive with ValidSoft has been how poorly management believes the company’s share price accurately reflects the intrinsic value of the company and its ability to generate revenues on the strength of its mobile enabling solutions alone. Indeed, the global cybersecurity space was recently projected by Cybersecurity Ventures (Q3 2015) as being on track to grow by over 120 percent in the next five years, hitting upwards of $170 billion by 2020. This is a big opportunity for an innovator like ValidSoft and it stands to reason that ETAK’s tight synergy between the mobile virtual network enabler (MVNE) and cybersecurity sides of its business will continue to give the company a decisive edge in the space.
The real success with ValidSoft of course comes from the ingenious balance struck between security and user experience that is achievable through the company’s voice authentication approach. Using a robust system which allows access, without the need for cumbersome and hard to remember passwords or hard tokens of some kind, is the brass ring of user authentication. Voice print capture keying is only as good as the biometrics engine behind it though and ValidSoft has gone to great lengths to ensure maximum security with the added benefits of a feature-rich environment, with the company’s solution allowing for configurability options like text-independent authentication, or the recital of a prompted phrase. Elephant Talk has been vital to ValidSoft’s ability to deliver its security software solutions via a true carrier-grade telecommunications platform, enabling ValidSoft the power to process transactions in real-time, and since its acquisition in 2010 by ETAK, the company’s MVNE and transaction cybersecurity units have rally gelled.
Take a look at the ongoing expansion of the mobile space, well-tracked by MobiLens® and Mobile Metrix® developer, comScore, Inc. (NASDAQ: SCOR), which recently indicated that the U.S. mobile market was at 76.6 penetration, as 186 million plus Americans now own smartphones. As subscriber bases swell to new heights, an MVNE like ETAK, with its ET Software DNA® 2.0 Platform, will continue to be a backbone solution for MVNO and mobile network operator (MNO) customers, who can experience as much as a 90 percent reduction in outlays while gaining the capacity to serve end users with a full set of mobile voice, SMS, and data services.
Mobile wallets are another key, fast-growing target in this area. With a report out in March from TechNavio forecasting a 36.8 percent CAGR through 2019, powered by the rapid proliferation of near-field communications (NFC) hardware and intense goading on by sector juggernauts like Amazon.com (NASDAQ:AMZN), Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), and PayPal (NASDAQ: PYPL), mobile wallets are shaping up to be a defining driver of the success of an outfit like ETAK. You wouldn’t be wrong to suggest even that a kind of war is being waged between the biggest sector players, with the victor(s) deciding who will dominate this yet-emergent space. One thing is certain about how all of this will shake out at any rate: m-commerce is and will continue to represent a retail sea change. Allied Market Research’s projection of a $5.25 trillion global market for so-called ewallets, released back in late 2013, has now effectively ceased to shock savvy investors.
Consumers have been flocking to the amenities m-commerce has to offer, and everyone from brands to retailers on the sell side are already banking on the very bright future that the associated gold mine of big data from consumers will provide. Gathering the kind rigorous, actionable consumer intelligence that m-commerce solutions can now ubiquitously provide, while so substantially improving the user experience at the same time, was a reality merely dreamt of by brands and retailers only a decade ago.
The recent news out that EUTV® Brazil (Surf Telecom®) has tapped ETAK to handle the core virtualized software services platform implementation is another clear indicator of the company’s overall health. The company’s platform is the key element needed to fully realize Surf Telecom’s vision of capturing a huge chunk of the 280 million strong mobile subscriber base in Brazil, now that Surf Telecom has been officially granted a Tier 1 license by Brazilian National Telecommunications Agency, Anatel. ETAK will enable Surf Telecom to bring mobile services to a massive user base, as well as provide Surf Telecom with the capacity to offer MVNE and mobile virtual network aggregator (MVNA) capabilities to Brazilian MVNOs. This is bread and butter for ETAK’s ET Software DNA 2.0 Platform and will allow Surf Telecom to deliver a broad spectrum of powerful 4G solutions to the market at noticeably more competitive prices. This arrangement reflects Anatel’s commitment to stimulating healthy market forces, as well as the cost-effectiveness of ETAK’s comprehensive platform.
The ET Software DNA 2.0 Platform also greatly simplifies overall administrative requirements, with its highly intuitive and easy to use interface. The platform uses networked-embedded technology as well, which enhances internal systemic redundancy, resulting in an architecture that is substantially more robust, offers tighter security and usage efficiencies, and which simultaneously promotes the DNA 2.0 Platform’s inherent modularity and scalability. The fact that it’s cheaper to deploy and easier to manage spells music to the ears of MVNOs, and ETAK’s technology will allow Surf Telecom to bring forward some truly cutting edge MVNA/MVNE strategies, tailored specifically to the Brazilian MVNO market.
MVNOs have to move or die and are thus constantly looking to expand services provided while improving their existing offerings. The ability to use a single, highly modular telecom solution like the one provided by ETAK allows MVNOs to capture new revenue streams without the typically associated overhead risk.
Learn more about Elephant Talk by visiting the company’s website at www.elephanttalk.com
