Highlights From Day 3 Of CSFB's Global Telecommunications CEO Conference
On Wednesday, March 7, a number of leading CLECs presented at the Credit Suisse First Boston Global Telecom CEO Conference. In the following
report,we highlight the remarks made by representatives of the companies listed below:
· Winstar Communications (WCII, $11.19, Strong Buy), Bill Rouhana
>
> · MPower Communications (MPWR, $4.66, Not Rated), Rolla Huff
>
> · Teligent, Inc. (TGNT, $1.34, Hold), Alex Mandl
>
> · ChoiceOne Communications Inc. (CWON,$9.63,Not Rated), Steve Dubnik
>
> · Adelphia Business Solutions (ABIZ, $5.16, Hold), James Rigas
>
> Investment Summary
>
> On Wednesday, March 7, a number of leading CLECs presented at day 3
> of the Credit Suisse First Boston Global Telecom CEO Conference. In the
> following report, we highlight the remarks made by CEOs of the companies
> listed below:
>
> Winstar Communications (WCII, $11.19, Strong Buy), Bill Rouhana,
> CEO
>
> · Rouhana reiterated FY01 guidance which is in line with our estimates
> of $1.06B in revenues and +$16M in EBITDA.
>
> · Funding: Rouhana stated that it should not be necessary to tap the
> public markets for additional funding. Instead, additional funding will
> likely be raised from one or more of 5 possible sources: 1) equipment
> vendors; 2) long haul providers looking for local bandwidth connectivity;
> 3) content companies (i.e., Microsoft and Oracle) looking for
> broadband connections to their customers and data center locations;
> 4) international telcos interested in acquiring US broadband assets;
> and, 5) cable TV companies interested in extending their broadband
> networks into the business market. Of these 5 possible sources, we
> think equipment vendors and long haul providers are the most realistic
> possibilities. In fact, Rouhana went as far as to say that a deal with an
> equipment provider is almost a certainty. We maintain our estimate
> that WCII is funded into 1Q02.
>
> · WCII discussed its on-net focus and indicated that the 85% of on-net
> line adds seen during 4Q00 should increase into the 90%+ range
> during FY01.
>
> · Rouhana emphasized that WCII will move very slowly and deliberately
> on its international rollout and stated that the company will not expand
> further into Europe until the initiative can be separately financed.
>
> · Reiterate Strong Buy on WCII shares.
>
> MPower Communications (MPWR, $4.66, Not Rated), Rolla Huff,
> President and CEO
>
> · Huff discussed MPower's end-user strategy which is focused exclusively
> on business customers.
>
> · The company reiterated FY01 guidance for revenue of $210-$230M,
> an EBITDA loss of $160-$185M, and cap ex of approximately $105-
> $120M.
>
> · Huff noted that local pricing in MPower's markets remains stable and
> that the company is not experiencing price erosion owing to competition.
>
> Teligent, Inc. (TGNT, $1.34, Hold), Alex Mandl, Chairman and CEO
>
> · Update on funding: We maintain our current forecast that TGNT is
> funded for approximately 4 months, or through 1H01. However, Mandl
> indicated that the company continues negotiations towards raising
> additional
> capital, and he expects to announce a funding event by April
> that should be comprised of both vendor and private equity financing.
>
> · Mandl indicated that demand is strong for the recently announced
> wholesale initiative where TGNT hopes to offer local wireless
> broadband capacity to companies such as IXCs and other CLECs
> looking to expand their presence in local markets.
>
> · We maintain our Hold rating.
>
> ChoiceOne Communications Inc. (CWON, $9.63, Not Rated), Steve
> Dubnik, Chairman and CEO
>
> · Dubnick reiterated FY01 guidance for revenue of $195-$200M, an
> EBITDA loss of $65-$75M, and capex of approximately $100-$125M.
> In addition, the company reiterated its comfort with expected 1Q01
> revenues of $34-$35M and an EBITDA loss of $24M. Under the current
> plan Dubnick estimates CWON should reach EBITDA breakeven
> in 2Q02.
>
> · Dubnick noted that local pricing by CWON to customers has remained
> relatively stable in its markets and that it has not encountered any
> pricing pressures owing to competition.
>
> · With $213M of cash and $83M available on its credit facility, management
> believes the company is fully funded to free cash flow.
>
> Adelphia Business Solutions (ABIZ, $5.16, Hold), James Rigas,
> President and CEO
>
> · Following the December '00 announcement when ABIZ scaled back
> its plan from 175 markets to only 75, Rigas highlighted the company's
> continued focused on on-net customer adds in order to improve
> profit-ability.
>
> · Rigas reconfirmed ADLAC's full participation in the rights offering
> which will conclude on March 19.
>
> · With the $450M bank facility that is guaranteed by ADLAC still in
> place, Rigas indicated that ABIZ is currently in discussions to obtain
> an additional bank line totaling at least $300M (perhaps as much as
> $600M). With an additional $300M in new financing, we estimate that
> ABIZ will be funded through 1H02, out approximately 6 months from
> our current forecast.
>
> · We maintain our Hold rating. |
