The reason of high trading activities in World Call Telecom

World Call Telecom Limited (WTL) has topped volume charts in last few days with daily traded volumes of 359mn shares (16% of free float) during last 3-days as against average daily traded volumes of 22mn shares for WTL in 2022 to date.

Increased investor interest was seen after material information shared by the company on Oct 4, 2022 which disclosed 1) completion of pilot project of Fiber to the Home (FTTH) and entry into second phase of FTTH conversion and 2) listing of Global Tech, parent company of World Call Services.

There are two main types of wires used for telecommunication which include Coaxial (Copper) and Fiber Optic. This project by WTL entails conversion of existing network of copper wires to Fiber to the Home (FTTH).

The reason for this is that fiber optic offers faster communication speeds. In simple terms copper wire connection is called DSL and Fiber Optic is called FTTH. These cables are used for providing broadband services to customers which includes Digital & Cable TV and Internet services (Broadband).

Currently, there are 123mn broadband subscribers in Pakistan as per Pakistan Telecommunication Authority (PTA). Out of these, there are around ~700k FTTH subscribers and 1.4mn DSL subscribers. The industry is undergoing a shift where DSL subscribers are being converted to FTTH.

In this regard, WTL will also convert its own subscribers as well as offer Fiber Optic Cables as a lease to other providers of internet services. As per PTA, Cyber Internet Serivces and PTCL are market leader in this category.

To finance the second phase of FTTH, the ultimate parent of Worldcall Telecom Limited called Global Tech Corporation has submitted security registration documents (Form 10-12G) with SEC, USA for listing at NASDAQ on 29th September, 2022.

Global Tech Corporation was incorporated in the state of Nevada, USA on December 12th, 2017. The scope of company is communications and broadband business in the country of Pakistan. The corporate structure is such that through its wholly owned subsidiaries Worldcall Services and Ferret Consulting, Global Tech indirectly has 58.5% shareholding in Worldcall Telecom Limited (WTL).

NASDAQ has three tiers for listing: NASDAQ Global Select, NASDAQ Global and NASDAQ Capital. The order of these three tiers is from most stringent to least stringent.

The three main standards of the NASDAQ Capital Market which is the least stringent of the three tiers are mentioned on the table given on the left. Companies aspiring to list on Capital Market tier must meet all of the criteria under at least one of the three standards given in the table. This means that for Global Tech to list on NASDAQ Capital Markets it must meet all the criteria of either Equity, Market Value or Net Income standard.

Besides the financial and liquidity requirements, companies must adhere to minimum Corporate Governance requirements.

After a company submits the documents it generally takes 4-6 weeks to process a listing application. This time frame is variable and may be shortened considerably, if the application raises no issues and the company responds to staff comments. Further, It is important to note that even though a company meet all enumerated criteria for initial inclusion, Nasdaq may deny initial listing, or apply additional conditions, if necessary to protect investors and the public interest as per the Initial listing guide of NASDAQ.

Global Tech has submitted consolidated financials of two and a half years of operations in its SEC filing. It has shareholder’s equity of US$58mn as of June 2022. In 1H2022, company reported loss of US$0.3mn whereas it reported loss of US$8mn in 2021 and a profit of US$6mn in 2020.

Courtesy – Topline Securities

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