DTGI - Digerati Technologies (DTGI) - Reaches For The Sky

Digerati acquires SkyNet. On January 5, 2022, Digerati announced the acquisition of SkyNet, a Texas-based cloud communication and broadband solutions company. The company used its $20 million debt facility to finance the acquisition. The acquisition adds $3.4 million annual revenue. SkyNet is in line with its acquisition strategy of seeking communication services companies serving small and medium size U.S. businesses in high growth markets, like Texas.Adds scale in high-growth markets. With the acquisition, the company expands its customer base in Texas to 737 businesses, more than 215% higher than before the acquisition. The acquisition is expected to provide immediate cost synergies with the company's existing Texas operations. Between Texas and Florida, the company now serves more than 3,100 businesses, which amounts to roughly 33,000 users. Notably, Texas and Florida are respectively the 2nd and 4th largest State economies in the U.S. by GDP.Seamless integration. SkyNet President, Paul Golibart stated that the business combination would tremendously enhance the portfolio of products offered to SkyNet customers. Moreover, both Digerati and SkyNet use an identical technology stack, which should help minimize the costs when integrating SkyNet’s business.Maintain Outperform rating. We are maintaining our price target of $0.15 per share. DTGI shares trade at 2.3 times Enterprise Value to our 2022 revenue forecast and 22.4 times Enterprise Value to our 2022 EBITDA forecast, well below its peers, which trade at average EV/2022 Revenue and EV/2022 EBITDA multiples of 3.7x and 40.3x, respectively. Read More >>