Hi Maurice,
Any idea as to orders of magnitude of operating costs for I*? I can't imagine that they are all that significant. Perhaps the more crucial issue is just how much of the value of the enterprise gets flushed in the restructuring. Assuming that MOT doesn't want to make good on their guarantees, I would think that all equity and most sub debt gets wiped. Assuming the senior lenders & MOT end up owning most of the show, how much debt can this puppy support?
Cross post from LOR:
As for the Austin Powers angle, Groooovy baybee! I am totally hip to that idea. Agree marketing is job one point five (one point oh being getting the birds up there, obviously, keep up the good work, Dr. A), and perhaps we are all a bit too smug in our confidence that G* has picked the right business model where the service providers (leaders in their various markets more or less) do the selling and have every economic incentive to do so, both as investors and beneficiaries of healthy margins.
So, I agree with you that we could all smell the coffee again this morning and start doing some table pounding on this marketing question and perhaps even on MW's famous p****g question.
On the pricing question, I have often wondered how much real control G* would have over the end price charged by its SPs (I am not aware of any contractual control). I guess, as shareholders, the SPs should have the right incentive to maximize the # of minutes sold, but I do worry that SPs might get greedy and say "hey, this phone is so cool and everyone wants one, we can get away with charging $4.50 a minute!, so let's milk this baby." Then G* would get short changed on the deal.
I sincerely hope that we are all correctly placing our trust in G* management that they truly have learned from the disastrous I* mistakes in execution, but the concerns voiced in this forum on the handset availability issue give me some pause, I must admit.
Cheers,
Thomas
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