MTI Wireless (LON:MWEE) is an Israeli company that specialises in the production of military and industrial grade communication aerials. Its aerials can be used for industrial purposes, for example water management systems (via MTI’s subsidiary Mottech).
We like MTI Wireless because it is well-positioned for the mass roll-out of aerials within 5G networks. Like all new technological breakthroughs, 5G will need to be supported by literally billions of dollars of cutting edge infrastructure. AIM-listed MTI can provide some of this.
What does MTI Wireless do?
MTI Wireless Edge provides a wide array of communications hardware to an international customer base. For example, it is supporting broadband providers to address the issue of TV White Space – the gap between frequencies used for television broadcasts. MTI is producing base station antennas that exploit the relatively low frequencies that exist within TV White Space to help end users in remote areas to access broadband. MTI was the first to market with these antennas, and as a consequence scored a contract in the US.
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MTI is also a defence industry company, hailing from Israel’s massive defence complex, which provides some of the world’s most cutting-edge military technology. For example, it secured a $1.5m contract recently from an undisclosed customer in Russia. MTI benefits from being able to work with clients who wish to upgrade their communications, but may not want to rely on providers in NATO countries or from China, for example. This has often been the case for Israeli defence companies.
Possible 5G growth scenarios for MTI Wireless
We prefer to focus on the possible growth scenarios that exist around the MTI Commercial division. This includes products in the fixed broadband wireless space, which would see demand for 5G roll out. This includes base station, subscriber and omni-directional antennas for point to point and point to multi-point systems. MTI already provides antennas for 4G networks.
There is going to continue to be security and political sensitivity around the roll out of 5G networks. We have already seen how this has kicked up a fuss in the UK and US with regards to Huawei’s potential role within what is going to be a critical area of national infrastructure. While we may not see MTI involved in the UK’s 5G roll-out, where it may see possibilities is in other countries where commercial providers of 5G are looking for a technical partner that is not closely aligned with major powers like China or the US. This is where MTI’s Israeli pedigree would come into play.
Shares up over 45% since August
MTI Wireless shares have experienced a considerable boost since August, gaining more than 45% in a matter of weeks during Q3. The stock has settled into a range since mid-September. Technical indicators all flag it as a strong buy going into November. MTI Wireless is still relatively small – its UK market cap is less than $43m, it has a P/E ratio of 17.83 (5 Nov) and a dividend yield of 3.25%.
MTI remains a relatively small company, despite having been trading since the 1970s. It has manufacturing facilities in India, but its main competitive edge remains its core technology and IP. We will keep an eye on its progress going forward as more countries begin spending on their 5G networks.