iQSTEL Inc (IQST)

[misteroldman]

Rob at Goldman! Jan. 2021 report.

THE LATEST
Biz Dev

The Company has executed a number of business development milestone events in recent months which help set the stage for future success. These include:
IQST’s Technology Division signed a LOI with emerging EV firm Alternet Systems (OTC – ALYI) to develop an IoT Smart EV device to enter the Electric Vehicles Supply Market.
The Fintech Division signed a MOU with PayVMS and the incorporation of a new subsidiary, Global Money One, for the development of our Visa Debit Card.
Also in Fintech, IQST executed an agreement with DTone for International Remittance and Top Up Mobile services in 42 countries worldwide. These services will be available through the Visa Debit Card.
IQST’s Telecom segment surpassed $5M in monthly revenue for three consecutive months, setting records.
The IQST IoT Smart Gas won the "Appliance of the Year" award as an IoT Breakthrough.
Capital Structure

In recent weeks, management has done a terrific job of improving the IQST capital structure, notably the balance sheet. Management recently announced the discharge of all convertible notes and warrants, and a 48% reduction in total debt. These critical changes will be reflected in the 1Q21 financial statements and we would not be surprised to see a nearly 100% reduction in long term debt later this year.

On a related front, IQST is pursuing a Reg A registered fund-raising strategy to avoid the potential need of requiring convertible notes or other, similar financing. For this reason, the Company submitted to the SEC an extension for selling 56 Million shares within the Reg A offering statement. We believe that given the big moves in the stock of late, and what we believe will occur in the future, the actual number of shares sold may be substantially fewer than 56 million and at a higher price than when the original documents were filed in 2019. In our view, IQST will likely raise money to fund future M&A, which has proven to be a successful strategy to date, given the integration and cross-sale successes.

Separately, in further proof of their ongoing commitment to and confidence in the overall long-term potential of the Company, senior management decided to convert 21 Million common shares into Series B Preferred shares, with a 1-year Lock-Up and an additional year Leak Out. All of these moves should be viewed as part of a strong, coordinated, and sound corporate strategy. We believe that these moves coupled with continued execution should lead to higher stock prices.

Multiple Offerings, Multiple Markets

While growing its core telecom services business via acquisition and organic growth, management had the foresight to take the next steps in the evolution of the industry: IoT (Internet of Things) and Fintech solutions. Judging by the Tier 1 players’ early moves in these directions thus far, it is clear that we are in the early innings of a technology and fintech evolution. Going forward, these categories should dramatically increase IQST’s revenue and profit, given the inherently higher gross margins.

Initially a VoIP wholesale provider for Tier 1 and Tier 2 carriers, through a series of acquisitions, the Company is now 21st century cloud-based service provider now offering SMS, valued-added SMS services, IoT services, blockchain carrier payment solutions, and B2C fintech products and applications. Each of these offerings represents multi-billion-dollar market opportunities. Today, SMS and value-added SMS accounts for the largest segment of business and also carries a higher gross margin than the VoIP wholesale services. The major entrance into this segment occurred in the first half of 2020 with the acquisitions and full integrations of Global SMS and the SMS division of IoT Labs which provide SMS wholesale exchange services as well as A2P platforms services for carriers and corporate use.

On the IoT front, the Company has a subsidiary that offers an IoT Smart Gas Platform that offers the first automated (IoT) platform for smart management of LPG truck refills. Plus, IQST has a logistics solution for various industry segments that offers significant cross-sale potential. In Fintech, IQST has a blockchain technology and application platform enabling telecom customers to operate with greater efficiency and prevent fraud via its Mobile Number Portability Application (MNPA) and Settlement & Payment Marketplace. Most recently, IQST launched a FinTech Division with a B2C focus on the large and lucrative 272 million migrants market. Future offerings include a VISA Debit Card, remittance applications, bill payment and third-party funds disbursement, sending money via SMS, EV joint ventures, and more. All in all, IQST benefits from the current growth in e-commerce and mobile remittances due to the global COVID-19 pandemic, as well as the favorability of the telecom space given the attention paid to 5G deployment and the introduction of the new iPhone.

The Company is currently finalizing its IoT, Blockchain payment and Fintech solutions and expects to fully launch the businesses during 1H21. It should be noted that the migration to a cloud-based system improves the integration of new clients and the addition of new client groups from any potential acquisitions.

VoIP

According to TeleGeography, the International Long-Distance traffic market size is estimated at $13 Billion in annual revenue, with 552 Billion Minutes exchanged yearly. It is estimated that Wholesale Carriers have a 68% total market share, carrying over 375 Billion Minutes per year. In general, this segment is enduring some shrinkage in terms of pricing and usage due to the proliferation of apps such as WhatsApp, Facebook Messenger, and others. However, emerging markets remain robust. For example, Africa accounted for approximately 10% of wholesale traffic, but 33% of wholesale revenues.

In addition to focusing its efforts on strengthening its business in Latam, Africa, and Asia, management hopes to build deeper relationships with corporations and enterprises by offering unified communication and managed service programs, which are common in more developed markets. Unified communication represents a single platform for voice, messaging and other applications and is offered as a cloud service. Managed service programs enable customers to remotely monitor and service servers, desktops, and mobile devices, thus offering flexibility to implement new resources efficiently and inexpensively. Managed Services market is expected to grow from $180.5 billion in 2018 to $282 billion by 2023 according to Markets and Markets Research. Separately, a managed security service provider (MSSP) provides outsourced monitoring and management of security devices and systems. Common services include managed firewall, intrusion detection, virtual private network, vulnerability scanning and anti-viral services. Managed security services in the US market alone is expected to exceed $45 billion by 2022. Thus, the Company seeks to expand its reach in key high growth markets via these new advanced applications and offerings. It is possible that future M&A could occur in these segments.

SMS

According to a recent report by Transparency Market Research, the A2P (Application-to-Person) SMS industry is expected to surpass $100 billion by 2030. The space is expected to experience continued noteworthy adoption in years to come, with 1.243 billion messages projected for year 2020. The ubiquitous nature of SMS ensuring maximum reach to customers has prompted marketers to switch to this communication channel. The steady inclination towards using SMS for marketing and other allied activities has been highly effective and consequently been adopted by various industry verticals. Apart from that, SMS has also been adopted for security authentication purposes proving to be of high worth to BFSI vertical. Banks and financial institutions, as well as Facebook (NASDAQ – FB), Google (NASDAQ – GOOG), Microsoft (NASDAQ – MSFT), and Netflix (NASDAQ – NFLX) among thousands of other uses SMS for security authentication purposes.

IoT

IoTLabs is an IoT (“Internet of things”) value-enhanced developer. The company develops specialized proprietary and OEM devices for different industries that wish to use IoT and AI solutions for their assets. In addition to an inhouse software and hardware world-class development team, IoTLabs has agreements with 4G and Low-Power-WAN providers to offer world-wide connectivity for devices developed for its clients. Thus, it can provide a turn-key-solution via either an OEM agreement for devices and software, or a month-to-month service agreement. The company currently develops for end-users through direct solutions for corporate use, as well as white labels.

Its first product to market is a patented-pending LP gas tank measuring device called SmartGas®. This device is geared for US retail households using traditional LP gas tanks who wish to never again find out they ran out of gas by stepping into a cold shower or by not being able to turn on their stove before a meal and are dissatisfied with the current alternative of climbing onto their roof to check the meter. The Company’s product is a sensor and control chip that you mount on your gas tank in less than 30 seconds that converts your gas tank into an IoT connected device through The Company’s proprietary web portal and phone apps, allowing for constant monitoring, alerting, and refilling through The Company’s gas partners. This device can also be distributed via gas-tank manufacturers, distributors and even LP gas tank providers such as ConEd etc.

Unlike traditional gas monitoring services, The Company’s patent pending device works anywhere there is a radio signal and/or cellular connection, and once connected to the tank, can be left unattended for over 2 years without needing replacement.

In addition to the SmartGas product, IoT Labs MX is a full service IoT logistics solution, powerful enough to support the most sophisticated business operations, and affordable enough to empower virtually any application. This disruptive solution could be deployed worldwide and in a variety of industries utilizing varied applications. For example, a combination of IoT, SMS, geo-location, and blockchain or fintech solutions could be developed in the labs where we believe a number of innovations will be introduced in the coming quarters.

Blockchain

IQST is in the final stage of development of a series of blockchain solutions aimed at using the blockchain ledger and smart contract solutions to enable more efficiency, quickness in execution and fraud-prevention in the telco industry. Specifically, the company is developing the Mobile Number Portability Application (MNPA) a solution that will enable users and carriers to transfer mobile phone numbers with just a few clicks, allowing users and carriers the ability to transfer retail users from one mobile carrier to another instantly.

It should be noted that Tier 1 and Tier 2 carriers are exploring how to leverage and utilize blockchain ledger platforms, along with fintech solutions. A leading-edge 21st Century Enhanced Telecommunications Service Provider is pleased to report major progress continues with subsidiary itsBchain’s blockchain-based Settlement and Payment Marketplace Platform. Cynopia developers have completed the initial blueprint phase of the Settlement and Payment Marketplace Platform are knee deep in Phase 1 which includes the smart contracts and preliminary clearinghouse for the platform. Once completed, the platform will go live concurrent with Phase 2 development ramp up in 1Q21.

Fintech

Separately, the proliferation of cryptocurrency transactions on leading platforms such as Paypal (NASDAQ – PYPL), CashApp, and others, is setting the stage for a convergence of cloud-based telco services with blockchain and fintech. After all, the backbone is in the cloud, where all of these applications’ databases and execution capabilities reside.

While the bulk of the Company’s direct Blockchain efforts are on the B2B sector, its recent announcement regarding the formation of a new B2C Fintech division could serve as a major catalyst and value driver for IQST. According to Global X and Mauro F. Romaldini (TopTal), the Fintech industry is growing at an almost exponential rate with over $500B in annual remittances and over $1.5T in annual mobile payments.

This division is targeting the 272 million-strong migrant workers, which leadership knows well given its focus on emerging markets. Management has stated that the knowledge gathered over the years through its Telco Division, along with strong customer relations with the large mobile operators around the world, has positioned iQSTEL to be the ‘point man’ between the immigrant end-user population and global telecommunications systems.

Migrants have specific financial management criteria that often cannot be met by the ordinary and readily available fintech products such as PayPal and Venmo. Even opening a bank account in a new country can be a challenge as many are often paid in cash. New features will include VISA Debit card, remittance, such as the ability to send money domestically and internationally with low fees or via SMS using a customized SMS service. Bill pay will also likely serve as an early feature.

Clearly, a great deal of cross-sale opportunities exist as IQST’s business evolves away from pure telecom services.

https://www.goldmanresearch.com/202101251304/Opportunity-Research/fast-growing-commfintech-player-set-for-more-stock-gains.html