update re net2phone's cable telephony deployments
Janco Partners 2004 Walk-About Company
Presentations Held on August 18th & 19th, 2004
NTOP: Steve Greenberg, CEO of Net2Phone focused his comments on the status of Net2Phone to finalize its customer agreements and to start offering cable telephony service to its addressable universe of 2.3 million homes.
Net2Phone, Inc. (Nasdaq: NTOP)
Analyst: Eric C. Buck, CFA
Target: $11
Rating: Buy
janco.com
Net2Phone (Nasdaq: NTOP, $3.37, Buy)
Steve Greenberg, CEO of Net2Phone focused his comments on the status of Net2Phone to finalize its customer agreements and to start offering cable telephony service to its addressable universe of 2.3 million homes. At the current time, Liberty Puerto Rico is the only net2Phone system currently offering service. In May, when the company took its launch system wide, there were about 1000 subscribers. Today, there are “multiple thousands” of subscribers. Further, reviews of customer satisfaction in Puerto Rico have been quite high.
Greenberg expects Altice, with 510,000 homes passed, to be online within the next two months. Bresnan, with 550,000 homes passed, is expected to turn on by the end of October and Northland (315K HP) by the end of the year. Only Cebridge, with 700,000 homes passed is questionable for this year as their priorities continue to be on video and data initiatives.
Greenberg also noted that the agreements as they are progressing are blending the company’s initial targets of a pure hosted or pure franchise model. As a result, the company’s capital requirements are likely to be somewhat lower.
Clearly the market has been disappointed that Net2Phone has not turned MOU’s and Letters of Intent into Contracts and homes passed into subscribers at a faster pace. If the company can meet the schedule outlined by Greenberg, that skepticism should be quickly erased. Meanwhile, the company’s legacy long distance VoIP service appears to be back on a growth path. With $1.70 per share in cash and a legacy business, at one time revenues, worth another $1 investors are paying only $0.65 per share or about $50 million total for the bet on cable telephony. At 20% penetration of its existing relationships, Net2Phone could be generating annual revenues of twice that amount. |
