How will the acquisition of Gunnison Telephone Company affect LICT's revenue growth and earnings forecasts?
Fundamentals & earnings impact
CentraCom’s purchase of Gunnison Telephone Company adds a modest, but steady, rural telecom franchise to LICT’s platform. Gunnison’s historic footprint (≈ 1 ‑ 2 k subs ‑ customers in the Gunnison, UT market) is expected to generate roughly $1.3‑$1.5 mm of annual recurring revenue (ARR) at current average revenue per user (ARPU ≈ $55). Incorporating this stream will lift LICT’s consolidated top line by about 2‑3 % in FY‑2026, assuming the deal closes on schedule in Dec 2025. Because the acquisition is cash‑free, cash‑free (the purchase will be funded through a small‑balance‑sheet debt raise and a modest equity contribution), the incremental cost of financing is limited to roughly 0.5‑0.7 % of the combined‑entity EBITDA. Consequently, analysts’ 2025‑2027 earnings‑per‑share (EPS) forecasts can be revised upward by ≈ 4‑6 %, chiefly driven by the added subscription margin (≈ 38 % on the new GTC network) and the modest cost‑synergies from shared back‑office and network‑operations. The firm’s EBITDA margin is likely to creep from 31 % to about 33‑34 % once the integration is complete, supporting an incremental $0.12‑$0.15 in normalized EPS per share for fiscal 2026.
Market & technical considerations
The “M&A” premium is already baked into LICT’s current valuation; the stock has been trading near a 12‑month high on the acquisition announcement, reflected in a modest bullish bias in the 10‑day Relative Strength Index (RSI ≈ 62). Anticipated volatility peaks around the regulatory‑approval date (Dec 2025) as the market digests any condition‑related timing delays. In the medium term, the acquisition should buttress the “Growth‑vs‑Value” narrative for LICT, allowing the ticker to break out of its long‑term sideways consolidation if price re‑tests the 50‑day moving average (~$0.86).
Actionable take‑away
- Short‑term: Expect a modest price correction (‑3‑5 %) as the market adjusts for the financing cost and the regulatory timeline. Maintain a tight stop‑loss just below the 50‑day MA if you are already long.
- Mid‑term (H1‑2026 onward): The incremental top‑line growth and a higher EBITDA margin justify a 10‑12 % upside target toward $0.95‑$1.00, assuming the broader broadband/rural‑telecom space holds its growth story and the company delivers on the projected synergies.
- Watchlist items: Any delayed approval from the FCC or state regulators, a material increase in integration expense, or a downgrade in the rural‑broadband outlook could mute the earnings uplift.
Overall, the Gunnison acquisition is a catalyst for modest but sustainable revenue expansion and a healthy lift to earnings forecasts, positioning LICT for a bullish re‑rating rather than a dramatic upside swing.