This Company Has A Head Start In Providing Affordable High Speed Broadband Services in British Columbia

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Urbanfibre Delivers Disruptive Internet, Voice, and Broadband Application Products Over its 200km High Speed Fibre-Optic Network Over the Next 12 months in Metro Vancouver and Victoria

In October 2015 Telus announced plans to roll out a $1 billion fibre optic network across Vancouver by 2018. Telus is hoping to lure consumers with 25Mbps to 150Mbps internet download speeds versus their current 15, 25 and 50Mbps offering. However, Telus may be well behind the curve by 2018.

One local Vancouver company has a significant head start, Urban Communications (UBN.V). Urban currently has 200km of Fibre Optic network running through numerous high density communities and is aggressively growing its subscriber base today.

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We had a chance to sit down with Urban Fibre’s CEO John Farlinger and discuss the company’s strategy to grow their fibre network and subscriber base.

Urban Communications (UBN.V) has launched ultra-high speed internet under the Urbanfibre brand for use in the home or office in British Columbia. Urban is able to do this because it has its own proprietary network extending approximately 200 km from downtown Vancouver all the way to Surrey and also parts of Victoria on Vancouver Island. UBN’s network was built out over the past decade while the company operated primarily as a fibre installation company.

UBN evolved in the last 18 months from a fibre installation company to one that delivers ultra high speed internet  services to the home or office. By offering residential customers 1,000 Mbps fibre optic internet for only $79/month UBN is blowing away the competition for residential broadband with speeds up to 200x faster than what many Canadians currently receive, and with better quality of service for downloads, streaming, gaming, and 4k streaming video. The UBN business model is a lot like Google Fiber in the United States, where they offer ultra high speed gigabit internet and television for half the price of existing cable and telecom offerings.

The market opportunity available to UBN is significant: Total serviceable markets within UBN’s network include 920,000 households with unique dwellings, 79,267 businesses with unique locations. With its fibre optic infrastructure a sunk cost and a $10.6 million tax shield (from non capital tax losses) UBN shareholders are positioned to benefit from the company’s extraordinary operating leverage.

To put the scale of this opportunity into perspective UBN reaches breakeven on an operating basis at roughly 3,000 residential customers along with a couple hundred business customers. CEO John Farlinger is hoping to exceed 2,000 residential customers and 100 business customers in addition to 3-4 municipal partnerships by the end of 2016.

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UBN has launched an aggressive direct response campaign (flyers, brochures,etc.) and in the last 12 months, the company has already achieved a roughly 15% customer conversion rate in serviceable buildings offering only an Internet product. The penetration rate should increase significantly as the company adds television and other products and services in the second quarter of 2016.

CEO John Farlinger says UBN will significantly increase subscriber acquisition rate during 2016, which could make UBN a tremendous success in terms of profitability and cash flow etc. Organic growth derived from its compelling value and quality of service proposition is the road to value creation for its shareholders.

Moreover, once UBN achieves key levels of penetration in the greater Vancouver market the company becomes an attractive acquisition target for any new player wanting to enter the Vancouver market; acquiring an established provider with a substantial infrastructure network will almost surely be cheaper than building one from scratch.

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