4G play VELA breakout on major acquisition and oth

4G play VELA breakout on major acquisition and other news gaining traction in .03 range...ran to .06 in feb on news that didn't even come close to this...wortha look Recall VELA discussions....Volume running ahead of avg........Actually didn't close where we thought according to yahoo last quote..... VELA 0.037 +0.0031 +9.14 1,561,066 0.035 0.038 \ Although todays chart not showing it, the stock saw a last minute jump to .039....Advancing from lower .03s..... ....A hunch it could go again to .06s like it did on the Wes Stull article back in Feb.... Splits: none VelaTel Global Communications, Inc. (VELA) -OTC Markets Prev Close: 0.03 Open: 0.03 Bid: N/A Ask: N/A 1y Target Est: N/A Beta: N/A Next Earnings Date: N/A Day's Range: 0.03 - 0.03 52wk Range: 0.01 - 0.24 Volume: 5,714,474 Avg Vol (3m): 3,443,290 Market Cap: 2.61M P/E (ttm): N/A EPS (ttm): -1.67 Div & Yield: N/A (N/A) Quotes delayed, except where indicated otherwise. Currency in USD. AdChoices What really sticks out in report is that the revenue stream will be immediate accretive....also notice it adds 16mil val to VELA...In addition,acquisiton is rapidly growing.... VelaTel Closes Its Acquisition of China Motion Telecom By Tobin Smith | March 11, 2013, 3:19pm GMT 3 hours ago Massively Accretive Deal Adds $12+ Million to VelaTel's Annual Revenues + $12MM-$16MM In Additional Private Market Cap…At Simple 2X Revenue Valuation VELA is a 20 Cent Stock Selling for 3 Cents Today…Wow! VelaTel Global Communications (VELA), a leader in deploying and operating wireless broadband and telecommunication networks worldwide, announced today that it has closed its acquisition of a 100% equity interest in China Motion Telecom (HK) Ltd. for a total purchase price of approximately US$6.4 million, with US$1.6 million paid in cash and the balance in the form of a promissory note payable within six months (contract amounts are in Hong Kong dollars, with their approximate US dollar equivalents described here). China Motion, www.cmmobile.com.hk/eng/, is the leading mobile virtual network operator (MVNO) in Hong Kong, with more than 100,000 customers. China Motion generates approximately $12 million in revenue and $2 million in EBITDA (net of certain intercompany charges) on a consistent and annualized basis over its past two years' financial statements (FYE 3/31). VelaTel will be entitled to consolidate China Motion's future results into its financial statements as of the March 1 closing date. VelaTel also intends to immediately upgrade China Motion's network operations center from 2G to 4G technology. "We expect to complete the upgrade in the next three to six months, and for this to result in a 25-50% increase in revenues by having the ability to offer customers enhanced data packages," noted VelaTel's CEO George Alvarez. NBT Analysis: What this REALLY means is VELA made a superb deal that is VERY accretive to their EBITDA cash flow…adds $12-$16MM to current valuation…and is incredibly strategic: China Motion deal is MASSIVELY Accretive: VELA paid $1.6MM cash for a company with $1MM cash in its bank account (from what we can infer based on various financial statements filed on HK Exchange from its parent company). China Motion Adds $12 Million to $16 Million in Public Company Valuation to VELA—which today has market cap of about $4.5 million (@156MM shares outstanding) because China Motion generates $150-200K a month in free cash flow aka EBITDA (from audited financial statements). $2 million of EBITDA (and growing 20% pre-VELA deal) times 6-8X EBITDA valuation for comparable public 4G mobile wireless companies adds $12-$16 MILLION in private company market value to VELA. At a per subscriber value of $800 (avg value per MVNO data customer recently paid for Virgin Media) the China Motion subsidiary has $80 million value—at 75% OFF that comp or $200 per MVNO subscriber China Motion is a $16 million value. VELA paid $64 per subscriber for CM’s 100,000 current subscribers…wow again. At 2X revenues valuation (the current Clearwire CLWR 4G wireless carrier comparable) VELA (already at $15MM+ ttm revenues for 2013 fully consolidated) is a $30 million valuation company TODAY or 20 CENTS a share—today VELA is a 3 cents a share value. The MVNO has 25-50% revenue growth potential based on a @$2MM upgrade of its network operations center (NOC) to 4G technology and speed (4G HSPA+ equipment not 4G-LTE…yet). This means in a few months the China Motion MVNO converts from 2G to 4G speed with VELA financing that HSPA+ equipment upgrade with 85% 5-year low cost equipment financing from their partner ZTE and pay the 15% down in cash from China Motion’s bank account. China Motion in turn will be able to UPGRADE its service to 4G (from 2G) and now sell SIMS that service ALL the latest smartphones—and charge 20-30% MORE per month MORE for their 4G service to give customers 20-50X more speed. There are GREAT synergies between VelaTel’s Zapna subsidiary and China Motion. Zapna sells a SIM chip overlay that lowers international long distance fees up to 90% for China Motion MVNO customers—who COULDN’T sell that upgrade? Every new Zapna client adds @$15-20 a month in VERY high margin revenues. Worst case scenario on the six month $4.8M note? Although with higher valuation VELA should be able to pay it off with MUCH higher value Convertible Preferred stock or debt…NBT has contacted at least 10 private equity funds that would purchase the $4.8M note for free trading shares in the worst case scenario. Figure 50 million shares get’s this done…which takes VELA to 200 million shares. It is in VELA’s best interest therefore to do EVERYTHING they can to do over the next six months to get this 7x-10X upside story OUT to the investment world. NBT has offered to LEAD the new shareholder acquisition charge for free trading shares…and we have many affiliated shareholder acquisition firms that have agreed to participate with us. AFTER note is paid off, IF VELA shares sell for anything LESS than 20 cents a share…it will be a GREAT use of some China Motion cash flow to repurchase VELA shares from the open market to arbitrage this accretive acquisition. NBT will endeavor to put together a majority of VELA shareholders to get a VELA board seat or Advisory Board seat to ENSURE that for once VELA management supports its share price and long suffering shareholders. Bottom-line—this deal is truly transformational for VelaTel for a dozen reasons…let’s visit a few more. The Rest of the Deal Points As an licensed MVNO, China Motion partners with leading mobile carriers in the Greater China region (China Mobile/China Unicom/China Telecom) to provide mobile wireless network services to retail customers using its own billing support systems, customer service and sales personnel. China Motion's business model focuses on frequent travelers who conduct cross-border business between Hong Kong, Taiwan and mainland China. China Motion is the first company in Hong Kong to offer customers a single cell phone SIM chip with dual number capability for use in either Hong Kong and China or Hong Kong and Taiwan (and now will also offer up to 90% discounted international calling plans via the VELA subsidiary Zapna to ALL the China Motion customers in Hong Kong, China and Taiwan). The acquisition of China Motion furthers several of VelaTel's long term strategic goals. First, China Motion's access to wholesale voice and data services using the wireless network resources of incumbent carriers will allow VelaTel to begin deployment of its projects in mainland China with a fraction of the capital expenditures originally budgeted. What does this mean? VelaTel is building B2B 4G networks with two massive $multi-billion state-owned enterprises—NGSN and CASC. Owning the China licensed MVNO means that VELA can deploy the MVNO (riding over-the-top of China Mobile/Unicom/Telecom spectrum) but branded as NGS or CASC network for 90% LESS cost than building a 4G network from scratch. This is a huge advance for VELA's B2B strategy in the PRC. Second, China Motion's experience and personnel in sales and marketing, customer service and billing solutions provides a platform to serve VelaTel's wireless broadband and voice networks worldwide. What does this mean? Velatel’s engineer nerds are NOT consumer marketers---they are the first to tell you this. They are going to bring China Motion's experience and personnel in sales and marketing, customer service and billing solutions TO their wireless carrier operations in Peru (Go Movil) and Croatia/Montenegro (Novi-Net and Montenegro Connect) as WELL as the future networks in PRC China with NGNS and CASC. THIS is great news for building out these 4G wireless networks and getting true value from the HIGHLY valuable spectrum VELA owns. Third, the acquisition creates tremendous synergies with VelaTel's Europe based subsidiary Zapna, which also focuses on long distance and roaming solutions that cater particularly to the frequent international traveler. "The roaming and long distance solutions offered by China Motion and Zapna complement each other. We expect the revenues of both subsidiaries to increase as each gains exposure to customers beyond their current regional markets in Northern Europe and Greater China," remarked VelaTel's President, Colin Tay. What this means? They will sell the hell out of Zapna’s SIM card overlay technology to China Motion customers for up to 90% LOWER roaming and voice calling costs at $15-$20 a month high margin revenues. Bottom-Line: Like I said—we at NBT have come TOO far with VelaTel and George Alvarez & Colin Tay to NOT see this friggin’ thing to the finish line. We own a few million shares directly…and our “VelaTel Syndicate” has to control 25-30 million shares. VelaTel has enough subsidiaries to build a $100 million company IF they focus on execution from here on out. NBT Capital Markets (owner of NBT Equities Research) will turn our shareholder acquisition engine on for VELA to tell this amazing under-valuation story to the retail and institutional investment world. IF VELA executes, $1 a share is NOT far-fetched given the current 4G per subscriber valuations of carriers around the emerging markets world…in fact $1 a share is quite low. Assuming VELA builds China Motion/NGSN/CASC networks in China to 300,000 subscribers…and Croatia/Montenegro to 100k subscribers…and Peru to 100,000 subscribers (adding Lima’s 8.7 million population to their network) a 500,000 subscriber 4G-LTE carrier would have a $500,000,000 value in today’s market. As data consumption grows 185% a year (Cisco’s numbers) 4G-LTE networks (that will turn into 5G networks by 2020) will be worth maybe $2000 per seasoned subscriber (sub with more than 3 years of continuous service. At the current valuation…VELA is the buy of a lifetime and NOW is our #1 Ten-Bagger Stock of 2013. Older article that casused VELA to double back in Feb: http://nbtequitiesresearch.com/report/2013-co...tel-global 2013 Could See The Rise Of VelaTel Global by Wes Stull VelaTel Global Communications Inc. (VELA) is a very little-known name of a holding company for telecommunications carriers in Asia, Europe, and South America. The company (formerly named China Tel Group) first began with one project in China, but has since expanded operations across the world. The stock has only had a few years of history - and it doesn't take a rocket scientist to figure out that after looking at the chart, it has pretty much been all negative. Before I get into why it may be different in 2013, here is a brief history on how the company (and stock) got to where it is now. It All Began With Chinacomm In 2008, China Tel merged with Chinacomm, a People's Republic of China [PRC] licensed company that held a license to build a high-speed wireless broadband system in 29 cities. Sparing the details of the ups and downs of the relationship, the two entities parted ways in 2011 due to Chinacomm wanting more control of the situation (while also wanting more capital). In November of that year, VelaTel (formerly China Tel) filed suit against Chinacomm for manipulating documents that resulted in the loss of $4,749,599. In October of 2012, VelaTel won their first judgment to continue injunctions - meaning that the court believed that there are criminal doings by Chinacomm. A Foray Into South America With GO MOVIL of Peru In April of 2009, China Tel acquired 95% of Perusat, now known as VelaTel Peru. After roughly two and half years, the GO MOVIL WBA network was launched in September of 2011 in the cities of Chiclayo, Chimbote, Ica, Piura, and Trujillo. The deployment of two additional cities is pending while the company is also in talks to acquire 2.5Ghz spectrum in what would be the grand prize of the country, the capital city of Lima. Operations continue to move forward and retail stores featuring ZTE equipment (under the company's GO MOVIL brand) have been opened, however subscriber growth is going slower than what the company had hoped for. With this being VelaTel's only property in South America, I would not be surprised if this unit was sold in the future -especially if they do not obtain spectrum in Lima. The proceeds from such a transaction could be put towards more profitable operations in other strategic parts of the world. The Not-So-Golden Bridge In 2010, China Tel entered into a memorandum of understanding [MOU] with Golden Bridge Network Communications [GBNC]. Over time, this situation began to resemble a path similar to that of the Chinacomm deal, whereas GBNC wanted more control of the operation. After disagreements over the direction of business, the two sides ultimately parted ways. The ZTE Partnership - When The Game Began to Change While the failures of the two China business agreements were major setbacks for VelaTel (which almost ended up being a one-two punch that knocked out the company), one of the most important relationships was developed in that time. In August of 2010, China Tel signed an MOU with ZTE Corporation, a global provider of telecommunications equipment that is currently 5th in the world in smartphone market share. Although effects of this partnership were not immediately seen, the relationship has developed into a game-changer for the company (which has since changed its name to VelaTel) over the past couple of years - with very favorable financing as a bonus. The NGSN & CASC Business Agreements With its business agreement with New Generation Special Network Communication Technology [NGSN] signed in October of 2011, VelaTel began a transformational shift in direction. The operational contract is focused on deploying a 4G network that will employ TD-LTE technology using equipment already commercially available and manufactured by ZTE. The business-to-business model is focusing on delivering personalized navigation and location based services [LBS] including GPS, mobile resource management solutions that allow enterprises to monitor and manage mobile workforces and assets. Following up on the NGSN agreement, less than a month later VelaTel entered into a business agreement with China Aerospace Science and Technology Group [CASC]. With over 120,000 employees, CASC is the chief contractor for the PRC's space program. VelaTel Accepted Into GTI Membership In December of 2011 VelaTel was accepted to membership by the Global TD-LTE initiative [GTI]. The GTI is a reputable trade group designed to bring together leading operators from across the world to develop and enhance the TD-LTE ecosystem. The group is comprised of some very well-known names, including founders China Mobile, Vodafone (VOD), and SoftBank, to name a few. The Addition of Luo Hongye Also in December of 2011 VelaTel announced the appointment of Luo Hongye as the chairman of its operating company in China. Being that Mr. Hongye is a co-founder of ZTE Corporation and served as the director of their international marketing department, this was an enormous positive for VelaTel. Although retired from ZTE, Mr. Hongye is very active within the telecom industry as he is the founder of VN Technologies, a company that specializes in the R&D and production of hydrogen fuel cells. Over the past year-plus, he has become an integral part in VelaTel's business negotiations, as his influence has allowed VelaTel to gain solid control over the direction of their new investments. VelaTel Adds Eastern Europe to Its Footprint With Novi-Net & Montenegro Connect In December of 2011, VelaTel signed on to a 75% stake in deals for Croatia's Novi-Net and Montenegro's Montenegro Connect. With equipment from partner ZTE, VelaTel is focusing on the deployment and expansion of the networks. In exchange for its equity stake, VelaTel will contribute all CAPEX and OPEX necessary to deploy and operate the networks until it becomes cash flow positive. The Acquisition of Zapna In April of 2012, VelaTel acquired 75% of Denmark-based Zapna, a provider of telephony and broadband solutions which came in with $1 million in existing revenue. Zapna specializes in providing mobile applications and Smart SIM cards that reduce mobile long distance and roaming charges. Since the acquisition, various agreements have expanded operations to Germany, Holland, Norway, and Spain. Setting The Plan Into China Motion In November of 2012, VelaTel acquired Hong Kong MVNO (mobile virtual network operator) China Motion for $5.8 million USD. Different from the Chinacomm and Golden Bridge agreements, VelaTel will be in 100% control of this investment. During its last fiscal year completed in March of 2012, China Motion generated $12 million in revenue with $2 million in EBITDA. MVNO operators are similar to standard telecom carriers with their own independent business strategies, billing capabilities, customer services, branding and technical support. The only exception to this is that MVNOs do not invest in or have their own cellular sites. Instead, they use the incumbents as allowed by law (for economical and environmental reasons). Just last month, it was reported by State media that the country may open up the telecom sector to MVNOs. There are six local licenses that will be awarded and trial tested by June of this year and these licenses are only open to Chinese applicants who meet the prerequisites. Because China has no experienced MVNO operator and China Motion is the only applicant that has Hong Kong MVNO experience, the company looks to be in prime position for a license. The MVNO license would allow VelaTel to provide voice call services to subscribers and consumers both in Hong Kong and China. With a local MVNO license, it would allow China Motion to acquire bandwidth in other parts of China. This added bandwidth would then allow for China Motion to provide increased, higher-grade B2B services on other platforms (such as the previously mentioned NGSN and CASC). VelaTel isn't the only one who sees the value in China Motion. Just weeks after the transaction was announced, VelaTel entered into a stock purchase agreement with Ironridge Technology Inc. for $12 million in funding at .20 per share - a tranche of which will go toward the purchase of China Motion. And yes, that is .20 with no 0 in front of the 2, and yes, that is over 600% above where shares closed trading on Friday. Where There Is Fear, There Can Also Be Opportunity On February 4, an extension to close the China Motion deal was filed via 8-K. VelaTel's stock has since continued its slide to near-historical lows, most likely in part to the fear that the deal may not close. I would bet that some firms out there are looking to make a quick profit by shorting VELA, while other weak-handed investors may have just been scared off. Whatever the case, I am in the camp that says the deal will close (note the S-1 filed at the end of January for details on all operations) and that this will be the first of multiple good news items to hit for VelaTel in 2013. The VN Wild Card As if all of the recent developments were not enough to pique your interest, there is one last wild card that could end up being the biggest hit of all - VN Technologies. As I previously mentioned, VN Tech specializes in the R&D and production of hydrogen fuel cells and is led by co-founder of ZTE, CEO Luo Hongye. This past September, leaders of the Chinese telecom industry met at an invite-only conference to exchange ideas on developing the framework for implementing a single detailed industry standard for hydrogen fuel cell power systems across the communications industry in China. Mr. Hongye was selected as one of the invitees. Since then, China's Ministry of Industry and Information Technology [MIIT] initiated a formal organization to set the policies for future needs for green energy and back-up energy for the telecommunication sector. The "members list" of this formal organization reads like a "who's who" of Chinese telecommunications, featuring China Mobile (CHL), China Unicom (CHU), and China Telecom (CHA), as well as the MIIT and top Chinese universities. There is also another party on that list. You guessed it - VN Tech and Luo Hongye. With China rapidly adopting green energy as an industry standard (see this PDF for more information on fuel cells and hydrogen in China), especially in the area of communications, VN Tech is in a very strong position (to say the least) to reap the rewards of this multi-billion dollar movement. As China continues its push to green energy (with subsidies for the carriers to convert to hydrogen fuel cells), I would expect orders to be placed once procedures are finalized. With connections to the three first tier carriers - not to mention the possibility of ZTE becoming a reseller of VN's batteries - I would not be surprised to see the first of multiple purchase orders placed to VN Tech in the coming months. Tying All of the China Pieces Together So to recap, VelaTel has two lucrative business-to-business agreements (NGSN & CASC) as well as MVNO operations through China Motion. Add to those one more key piece, and that is Sino Crossings - 34,000 km of fiber optic cable that VelaTel holds the rights to. With this piece of digital real estate, the potential is there for VelaTel to provide national transport for its wireless broadband access networks across China. Throw in VN Tech for good measure, and VelaTel is sitting on an impressive list of holdings in the PRC. Current or potential investors can begin to draw their own conclusions from this portfolio of Chinese assets, but I have a feeling that VelaTel CEO George Alvarez will begin to put these pieces together for us over the coming months. Investing In VelaTel Any time that shares of a stock trade for pennies, it is always considered a highly speculative investment. Businesses in their infancy go through huge challenges and dilution is always a threat to shareholders. This proved to be the case with VelaTel as the company had to pay its staff with shares in the second half of 2012. Because of the dilution these payments and other business deals caused, a 1:100 reverse split was announced last summer. I have owned shares of VELA for years now and have been accumulating some since the reverse split. Even after the split, shares continued to slide. As of last Friday's close (& the writing/submission of this piece), the stock was priced at .032. That, by the way, puts VelaTel at a current market cap that is less than what they could be owed by the Chinacomm lawsuit. Or, to look at it another way, it gives VelaTel zero credit for the spectrum they already have. What I also find very intriguing is that Friday was the highest volume trading day in over three years. With relatively little movement in the price, it appears that buyers could be accumulating the name in size. With the close of the China Motion deal, shares should start to make a positive, extended turn. Add into that a possible purchase order to VN Tech, not to mention any naked shorts (that typically stalk these lower priced stocks) being forced to cover, and these prices could seem like a dream by this summer. There are never guarantees in stock investing, but there are also risk/reward scenarios that only come along once every so often that offer a "ground floor" opportunity. Depending upon what the company delivers in 2013, VELA could be one of those stocks. Disclosure: I am long VELA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. above wa