BARTLETT, Tenn. - SurgePays, Inc. (NASDAQ:SURG), a technology and telecom company, has announced a new partnership with TerraCom, Inc., enabling the company to extend the Lifeline program—a government-subsidized telecommunications service—to its current Affordable Connectivity Program (ACP) customers. The agreement, effective since October 3, 2024, also includes a pending stock purchase agreement for the majority of TerraCom stock, awaiting regulatory approval.
The Lifeline program provides a monthly discount ranging from $9.25 to $34.25, depending on the state, to eligible low-income subscribers. SurgePays' Chairman and CEO Brian Cox stated that this move would transition the company's 280,000 ACP wireless subscribers to the Lifeline program, which he believes will help SurgePays return to positive cash flow. Cox also noted the company's decision to continue servicing its ACP customers despite the government's cessation of funding, expressing confidence in the company's financial strategy and the potential for profitability.
SurgePays, focusing on underserved communities, operates through a network of over 8,000 convenience stores, providing prepaid wireless and financial services. The company also offers prepaid wireless services to more than 280,000 low-income subscribers nationwide. In light of the new agreement with TerraCom, SurgePays is looking to enhance its sales efforts on its other products, including Linkup Mobile, Wireless Top-Up, and Clearline, as it prepares for the year ahead.
This expansion into the Lifeline program is part of SurgePays' broader strategy to grow its service offerings and market presence. The company was recognized as the 345th fastest-growing tech company in North America on the 2023 Deloitte Technology Fast 500 list.
The information in this article is based on a press release statement from SurgePays. The forward-looking statements within the press release reflect the company's expectations for future operations but are subject to risks, uncertainties, and other factors that could affect actual results. These include the potential for changes in the ACP's funding status and the completion of the transaction with TerraCom. The company's performance and the successful integration of the Lifeline program into its services remain to be observed by the market and regulatory bodies.
In other recent news, SurgePays, Inc. reported a significant decline in its second-quarter revenue, falling from $35.9 million in the same quarter of the previous year to $15.1 million. This downturn was primarily due to the cessation of federal funding for the Affordable Connectivity Program (ACP). Despite the setback, SurgePays has outlined a recovery plan that includes the launch of a new non-subsidized MVNO business, LinkUp Mobile, and a stock buyback program of up to $5 million.
The company also announced the appointment of Joe Gomez as VP of MVNO Operations. Furthermore, SurgePays aims to achieve positive free cash flow by the end of the year through various initiatives, including the expansion of product offerings and scaling up third-party wholesale transactions. As part of its recent developments, SurgePays is transitioning to a customer-funded model and is considering accretive acquisitions and expanding into convenience stores to cater to the underserved market.
Despite missing its revenue targets due to the lack of federal funding, SurgePays remains optimistic about its transition plan and long-term success. The company is exploring opportunities with the ClearLine platform for dynamic advertising and prepaid transactions. SurgePays' recent activities highlight its strategic pivot to navigate through the current financial turbulence and position itself as a stronger player in the MVNO market.
InvestingPro Insights
SurgePays' recent partnership with TerraCom to extend the Lifeline program to its ACP customers comes at a critical time for the company. According to InvestingPro data, SurgePays has experienced a significant revenue decline, with a 21.02% drop in the last twelve months as of Q2 2024. This move to transition 280,000 ACP wireless subscribers to the Lifeline program could be a strategic effort to stabilize revenue streams.
The company's financial health presents a mixed picture. An InvestingPro Tip highlights that SurgePays holds more cash than debt on its balance sheet, which could provide some financial flexibility as it navigates this transition. However, another tip warns that analysts anticipate a sales decline in the current year, underscoring the importance of the new Lifeline program initiative.
SurgePays' market performance has been challenging, with the stock price falling significantly over the last year. The company's market cap stands at $33.17 million, reflecting the market's current valuation of its prospects. Despite these headwinds, SurgePays has shown a strong return over the last month, possibly indicating some investor optimism about recent strategic moves like the TerraCom partnership.
It's worth noting that InvestingPro lists 13 additional tips for SurgePays, offering a more comprehensive analysis for investors considering the company's future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.