TH1NG recently announced the divestment of its broadband customers in the corporate segment to Bahnhof for a price tag of SEK10m. According to the company, the strategic decision behind this move is to focus on the IoT business. In 2021, TH1NG sold its 20,000 individual customers to Bredband2 for SEK20m. We believe the remaining part of the broadband business now sold to Bahnhof includes some 1,000 corporate customer services, municipal companies, etc.
We estimate that the broadband segment accounted for approximately cSEK12m out of TH1NG’s total net sales of SEK22.5m in 2023. Initially, the price tag of SEK10m may seem low, with a P/S multiple of approximately 0.8x. However, we believe the gross margin for this segment is 20-25% and that the segment is borderline breakeven at its best. Nevertheless, from Bahnhof’s perspective (trading at a trailing twelve months (TTM) EV/S multiple of approximately 2.4x), it is expected to be a good deal since its operational costs for this customer base are likely to be much lower than THING’s. Upon realising the synergies, we would not be surprised if Bahnhof would consider an EV/EBIT multiple of 5-7x for the acquisition (Bahnhof is trading at a TTM 14x EV/EBIT multiple).
By the end of 2023, TH1NG’s cash position was strained, amounting to SEK4.5m. Although TH1NG announced a new convertible note issue of SEK1.1m in February and still has a mandate to issue further convertibles of SEK4.9m, we believe the underlying reason for the divestment was to avoid further dilution through an equity issue. We estimate that the proceeds from the divestment will stabilise the cash position for the first half of 2024, but we foresee a potential need for further cash injections in the second half of 2024. However, we will await the Q1’24 report before modelling such a scenario in our valuation.
Overall, Redeye views the divestments positively as it stabilises the cash position, improves the gross margin, and reinforces its focus on the IoT business. The broadband business is a volume game, and TH1NG lacks the capacity and the strategic intention to grow enough to scale the business. We leave our base case unchanged at SEK4.0.

We adjust our forecasts following the divestment, indicating that TH1NG will experience an approximate SEK12m decrease in annual sales. However, we anticipate positive gross margin and operating expenses (OPEX) effects. For 2024e, we expect a slight negative impact on EBITDA due to the divestment. However, for 2025-2026e, we anticipate that the gross margin and OPEX improvements will offset the sales loss on an EBITDA level.