Kunkel - Moving into foreign markets.
Its been a while since I've been at this post. My last post predicted a huge wave of funding availability once the stock price hovered in the 40-50 range.
Just a couple of quick questions. My understanding is that PSINet is committed to moving into the top 20 markets before the millenium. While I find the company and its team must be commended for its acquisitions in the first 15 or so markets, I think the next 2 or 3 could prove to be a challenge. Taiwan and China are all interesting markets but have difficult regulatory hurdles. In Taiwan, you must lease fiber from the local phone monopoly and in China, while there's a push to the internet, they haven't been very open with foreigners. For a while, a couple of major telcos in Hong Kong were thought to be interested in entering China, however, that did not occur. They were on the telecoms side and also had good government connections. How does PSINet plan to enter these markets? The markets are getting more expensive and competitive. UUNet plans to offer services in Hong KOng and just promised to do the same in Singapore. Did you ever wonder why Pacific Internet, as a customer focused ISP operating in highly competitive markets, traded at about 20-30% of market cap PSINet?
Also, in Taiwan and China I doubt that any of the businesses for sale would be EBITDA positive. If anything, the price would be higher than you're willing to pay probably.
Australia, however should be an interesting case, since, as you probably, know it has the Internet pentration is the highest in Asia and ranks among the highest in the world. Everyone speaks english and computer pentration is pretty good too. The problem is that, after the big incumbent telco and OZEmail/UUNET, there are a bunch of tiny players. Might have to make two or three acquisitions to make a worthwhile presence there. Then aim quickly to be the #3 player in the market.
With all the money that the company has raised, when are you guys going to start a venture capital fund, sort of like a PSINet ventures fund, a la Intel, Cisco, Microsoft who have made minority investments in ventures so they can sit on the board and get an insight into the latest trends and technologies. It might be quite useful in the european and asian markets where it might be difficult to track all those happenings. If they do well, you also get a nice ROI!
Lastly, what do you think about Cincinnatti Bell controlling IXC now? CBell's contributions appear limited -only stateside. Doubt they have much international interest or knowledge.
Regards |
