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Technology Stocks : Broadband Wireless Access [WCII, NXLK, WCOM, satellite..]
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To: Bernard Levy who wrote (1307)8/19/2000 9:15:28 AM
From: limtex   of 1860
 
BL - The European wireless guys are spending money
on 3G auctions like drunken sailors

That in my view is the real problem.

How could it come about that normaly staid sensibly run companies could have got caught up in the madness that led them to such unwarranted exhuberance?

The answers are complex but have a lot to do with the previous state owned companies that used only to be able to make money by charging captive populations huge per minute costs.

When their monopolies were removed, please remember that the respective governments SOLD their stock in these companies to the public ( Privatization) although of couese they kept the 30% to 40% equity in a disguised form as the tax on the coporations profits, these companies gravitated to the replace the previous easy money maker with mobile service which seemed set to give them the same comfortable ride as before. But unfortunately wireless changed much quicker than their last money maker which lasted nearly 70 years and along came 3G.Even more unfortunately for these companies only a few years later these same governments are again gouging by selling some spectrum, although once again they retain the freehold and are only selling 20 year leases.

Well you can only do that to the market once in my view and now although the governments concerned have got their money this time I think it is a sale too far and the market is going to whack the companies that bid.

Sadly these companies may find it a bit more difficult now to be big buyers of companies around the world. European pension funds tend to have models that largely cause them to include stocks like BT, DT and France Telecom in their portfolios but my guess is that even the European pension funds will start to reduce holdings in those companies making it even harder for them to make acquisitions.

Next will come the "show me" syndorme that investors will require of these companies to see whether or not there is going to be a serious take up of 3G services. So far WAP in Gt Britain has been almost a total flop.

Meantime further bad enws for telcos is going to come from ever cheaper IDD rates. In fact my guess is that we will possibly next year start to see fixed monthly charges in Gt Britain for unlimited calls to the US.

All this should bode well for WCII in my view as provision of access and bandwidth ought to be the resultant winner and WCII is very well postioned to do just that.

Best regards,

L
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