TeraGo's Spectrum Certainty: The ISED Decision Reshapes the Story
Millimeter wave licensing clarity and improving revenue quality signal a strategic inflection.
TGO.TO · Earnings Call · 2026-08-13
The Regulatory Overhang Lifts
After years of uncertainty, ISED's May 2026 decision on the 26/38 GHz bands gives TeraGo a clear future. CEO Daniel Vucinic called it "the most significant development during the quarter" (“the most significant development during the quarter was ISED's decision regarding the future licensing framework for the 26 gigahertz and 38 gigahertz spectrum bands” — Daniel Vucinic, Chief Executive Officer · 2026-08-13). The flexible use framework allows both fixed and mobile services, and the timeline for the October 2027 auction is set. TeraGo holds the largest millimeter wave spectrum portfolio in Canada, so this is a strategic re-rating.
We believe this decision significantly enhances the strategic importance of our spectrum portfolio and expands the opportunities available to TeraGo under a flexible use framework.
The decision resolves a question analysts have asked repeatedly. In the prior quarter (2026-05-13), CEO Daniel Vucinic said ISED was still "keeping their cards close to their chest" (“ISED is still keeping their cards close to their chest” — Daniel Vucinic, Chief Executive Officer · 2026-05-13). Now that overhang is gone, opening the door to Canadian millimeter wave ecosystem participation. The flexible use licensing expands options like private wireless networks and enterprise mobility.
Operating Momentum and Revenue Quality
While total revenue dipped to $6.21M from $6.34M a year ago, the composition is improving. ARPA rose 4.2% to $1,279, as CFO Raj Sapra noted: "Our average revenue per customer or ARPA in our connectivity business increased by 4.2% to $1,279" (“Our average revenue per customer or ARPA in our connectivity business increased by 4.2% to $1,279” — Rajneesh Sapra, Chief Financial Officer · 2026-08-13). Churn held at 1%. Backlog MRR fell YoY to $78,788 but rose sequentially—a sign 2026 bookings are outpacing 2025. The revenue dip reflects lower 2025 bookings, delayed multi-site installations, and intentional churn of unprofitable accounts. Adjusted EBITDA jumped 16.8% to $1.06M, reflecting cost discipline.
The company is increasingly targeting large mid-market and enterprise customers, particularly multi-location organizations, while shedding low-margin accounts. As CEO Vucinic observed, “organizations are increasingly seeking connectivity partners that can deliver reliable network performance, responsive support and the flexibility required to support increasingly data-intensive operations” — Daniel Vucinic, Chief Executive Officer · 2026-08-13. This aligns with the backlog MRR momentum and a focus on largest holder of millimeter wave spectrum.
Prior to this quarter, David McFadgen had asked when revenue would turn positive, and management pointed to the latter half of 2026 (“we should be seeing an uptick in revenue and going in the right direction compared to the last few quarters” — Daniel Vucinic, Chief Executive Officer · 2026-05-13). With bookings improving and the spectrum catalyst, the path is clearer.
Positioning for the Millimeter Wave Future
TeraGo is betting on growing demand for high-capacity, low-latency connectivity driven by AI and private wireless. The ISED decision lets TeraGo monetize its spectrum through partnerships or new services—a conversation that previously had no timetable. As the CEO put it, "We believe millimeter wave spectrum will play an increasing important role as network capacity requirements continue to grow" (“We believe millimeter wave spectrum will play an increasing important role as network capacity requirements continue to grow” — Daniel Vucinic, Chief Executive Officer · 2026-08-13). The company is already seeing stronger engagement from organizations seeking connectivity for data-intensive operations.
The broader market is also warming to AI infrastructure and spectrum themes, as seen in global keyword trends like AI data centers and co packaged optics—though TeraGo's specific angle is uniquely Canadian spectrum. The ISED decision makes TeraGo one of the few pure plays on millimeter wave flexible use in the country.
In summary, TeraGo has turned a regulatory overhang into a defined opportunity, while quietly improving its revenue quality and profitability. The recent sequential backlog growth and spectrum clarity argue for a re-rating as the 2027 auction approaches.