Investors Question Towerstream Corporation (NASDAQ: TWER)’s Business Model?


In the recent times, the management of Towerstream Corporation (NASDAQ: TWER) has been talking about issues such as reducing cash burn and customer churn. Then in 1Q2016 the company reported improvement in cash burn and customer retention. But some investors had questions for the management at the recent conference call regarding the company’s business model: Is Towerstream’s business model sustainable?

The question arises from the fact that the company has been undergoing some sort of restructuring whereby it is closing certain operations to heighten focus on others. Towerstream’s CEO, Philip Urso, did try to explain why he believes the company not only has a sustainable business plan, but is also uniquely placed to capitalize on the strong demand for high-speed and reliable wireless Internet connection.

Clarifying the business model at Towerstream Corporation (NASDAQ: TWER)

According to Urso, Towerstream Corporation (NASDAQ: TWER)’s business involves providing customers with fiber-like Internet access and that is an area that the company claims it excels better than the competition. For example, Urso said that Towerstream can deploy its fiber-like Internet quickly and inexpensively in dense cities. On top of that, he said that their Internet service has no point of failure unlike traditional fiber systems.

Towerstream Corporation (NASDAQ: TWER) makes use of microwave radio to deliver Internet that is faster than fiber and nearly as stable as fiber. However, Towerstream’s Internet is beamed from the sky whereby the company uses skyscrapers to deliver its Internet.

The fact that Towerstream’s Internet system can be deployed faster than traditional fiber means that the company has better chances to lower its infrastructure set up costs and delays compared to fiber systems.

Keeping customers in

Towerstream Corporation (NASDAQ: TWER) is currently in the process of boosting subscriber retention so that it can extract maximum value from each customer it serves. Additionally, the company is working to trim cash burn so that it can save more funds to reinvest in growth and also boost earnings.

Bottom-line improves

In 1Q2016, Towerstream said its net loss narrowed to $6.99 million compared to $8.92 million a year earlier despite revenue for the quarter falling to $6.73 million from $7.17.


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