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LICT Corp. Is Far Too Cheap

Feb. 13, 2014 3:39 PM ETLICT Corporation (LICT)27 Comments
Saj Karsan profile picture
Saj Karsan

Editors' Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

The fixed-line telephony business is one that should experience negative growth in the coming years, as competition from wireless carriers renders many land lines useless. As such, the market accords companies in this space low multiples, and perhaps deservingly so. But some great opportunities arise when the market paints all companies within an industry with the same brush, without regard to what may be occurring within each business.

LICT Corp. (OTCPK:LICT) is a cash-cow that Mr. Market appears to have left for dead. But within LICT Corp. is a growing telecom business that is now driving total company revenue higher, which should result in excellent risk-adjusted gains for long-term investors.


Through some fifteen geographically diversified subsidiaries, LICT Corp. provides broadband and voice services. The business can be divided into two segments:

1) Regulated

LICT offers land lines, DSL, long-distance and other fixed-line services to customers primarily in rural areas where LICT Corp. is the only provider. This is the business that is in decline (these revenues are down 6.5% through the first nine months of 2013), as customers switch to wireless services.

2) Non-Regulated

LICT offers the same services as described above but in competitive (and therefore non-regulated) markets, and also offers broadband and cable television services to both its captive (e.g. rural) customers as well as to those in competitive markets.

While the company derives most of its revenues and earnings from the regulated segment, which is in decline, the company's revenues are actually growing overall because of the strength of its non-regulated business. Non-regulated revenue is up almost 11% through the first nine months of 2013, and is the

This article was written by

Saj Karsan profile picture
Saj Karsan founded an investment and research firm that is based on the principles of value investing. He has an MBA from the Richard Ivey School of Business, has completed all three CFA exams, and has an engineering degree from McGill University. Visit his blog, Barel Karsan (http://barelkarsan.com/).

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