I mistakenly wrote that the Kaufman Bros. target of $15 was a twelve month target.
There is no such time frame, just a target price.
Kaufman lists a next report date of February, so perhaps continuing – and updated – coverage will indeed occur and will consequently raise GBT's visibility. In addition, if the FED does further lower rates, perhaps some new money will gravitate to GBT since conventional wisdom is that telecoms benefit in an easing environment.
One point of particular interest, at least to me, were Grover's comments regarding BESTEL's rights of way and concessions, and their view that BESTEL's network would be very difficult for any competitor to duplicate because of barriers to obtaining rights of way now. Of course, read the entire report for yourself and form your own judgments.
From the opening paragraph discussing BESTEL:
BESTEL, currently 49% owned by GBT, is a facilities-based provider of high bandwidth voice and data services. The company is developing a fiber-optic network that, when completed, will encompass 10,334 route kilometers addressing 100 cities representing the majority of Mexico's economy. The company has built the bulk of its network by burying hermetically-sealed conduits four feet deep along railroad rights of way (ROWs), which enable it to gain access to most of the country's financial centers and make maintenance/upgrades of the network simple and cost effective. In addition, we believe these ROWs provide BESTEL with a competitive advantage because the railway system has been privatized since they were negotiated. Therefore, it would be very difficult for another entity to replicate/obtain similar ROWs.
And from the last paragraph discussing BESTEL:
We note that on one hand, only the first two phases of BESTEL's network are complete, so investors may question the appropriateness of using the Global Crossing transaction as a benchmark for the company's entire infrastructure. Yet the ROWs of the final two phases are already in possession of BESTEL, meaning the company is well positioned to complete its network within the next 18 months of breaking ground on Phases III and IV. We view the company's ownership of ROWs, along with owned fiber routes in the U.S. and two excess ducts along the majority of Phases I and II as more than offsetting the work-in-process status of BESTEL's network, making $3,202 (value per fiber kilometer of last year's sale to Global Crossing) a relevant comparable for valuation of the company. In addition, we have factored in the $200 million cost to complete Phases III and IV and note that replication of this network is basically impossible in light of the significantly anti-competitive nature of Telmex and the fact that the ROWs would be difficult to obtain in the post-railroad deregulation era.
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