ML's TGNT preview (from last week) lowering Merrill's already low revenue number (Bo Fifer at DBAB is looking for $5.5MM):
Investment Highlights:
· On August 12, we expect Teligent to report
strong 2Q99 results, highlighted by solid top
line growth and continued rapid network
deployment.
· We reiterate our intermediate term
Accumulate and our long term Buy opinions.
Our price objective remains unchanged at
$66, or 15% upside based on our 10-year
DCF model.
Fundamental Highlights:
· We are lowering our 2Q99 revenue forecast by
11% from $4.5M to $4.0M to reflect a
slower than expected ramp up of local line
provisioning. We now expect revenues to
grow sequentially by 167%, up from $1.5M
in 1Q.
· Our EBITDA forecast remains virtually
unchanged at a loss of just under $90M.
· We are revising our FY99 revenue forecast
downward by 8% from $36.0M to $33.0M to
reflect a slower ramp up in local access line
provisioning. Additionally, we are slightly
narrowing our '99 EBITDA loss estimate from
a $348.5M loss to a $348.0M loss, a widening
of $141.8M from FY98's $206.2M loss.
On August 12, we expect Teligent to report solid 2Q99
results highlighted by continued strong top line ramp up.
In addition, network deployment appears on track with
28 in-service markets currently, up from 26 at the end of
1Q and with 40 still expected by YE99. We reiterate our
12-18 month price objective of $66, or 15% upside. Our
price objective is based on our 10 year DCF model and
assumes a 15% discount rate, 9x terminal year EBITDA
multiple and no public market discount.
Highlights of our 2Q99 Forecasts are as Follows:
Revenue: We are lowering our 2Q revenue forecast for
Teligent by 11% from $4.5M to $4.0M because local
access line provisioning has been ramping up at a slower
rate than we had previously expected. We now expect
sequential quarterly revenue growth of 167% versus our
previous expectation of 200% growth.
Lines: We expect Teligent to add approximately 15,000
additional lines during 2Q, up 76% versus the 8,500 lines
added during 1Q99 but approximately 5,000 below our
previous estimate. Total lines in service at quarter end
should reach 32,600, up 85% versus the 17,600 lines in
service at the end of 1Q.
EBITDA: We have slightly narrowed our EBITDA loss
forecast by $0.2M from a loss of $90.0 to one of $89.8M.
This revised estimate represents an $11.5M widening from
1Q's reported EBITDA loss of $78.3M.
Buildings: We expect Teligent to report a total of 1,500
on-net buildings for the end of 2Q, up 88% from 799
buildings at the end of 1Q. We also anticipate that
Teligent will have added 500 new buildings under leases
and options for 2Q, bringing the total to 3,600, a 16%
sequential increase.
Full-Year '99 Forecast Revisions: Because of slower than
anticipated ramp up of local service revenue, we are
reducing our FY99 revenue estimate by 8% from $36.0M
to $33.0M, versus just $1.0M for FY98. Our full year
EBITDA loss estimate remains virtually unchanged at
$348.0M versus our previous estimate of $348.5M, as the
bulk of Teligent's spending remains geared to the support
of commercial service deployment. This new estimate is a
widening of $141.8M from the EBITDA loss of $206.2M
reported for FY98.
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