re: Robert C. Atkinson
Frank,
I stand corrected, of course you are right. Just looked it up in my copy of the book "Tele Revolution" (by Richard G. Tomlinson) and it's exactly the way you describe it..
TCG was a brainchild of Merril Lynch and the Port Authority. Soon (but later) Bob Annunziata and Robert C. Atkinson were hired. Thanx for pointing that out. Later, ownership of TCG shifted from Merrill Lynch, Port Authority and Fidelity to Cable TV providers... then and IPO was instigated..
I found it interesting to see what the former CLEC power-brokers are doing now or have been doing since the telecom crash of 2001
just to track a few of the contenders:
Atkinson is chairing CITI (together with Eli Noam)
Annunziata is on the management of privately held Pacific Crossing
Rolla P. Huff went to Mpower as CEO, recently taken private
Andrew Lipman (MFS legal strategist) went to Mpower's BOD
John Warta (GST then ousted CEO) now heads a CLEC in Hawaii (a remnant of GST's network)
looks like the only survivor who built his company into a multi-billion venture was Jim Crowe of LVLT. Note that this was a "late stage" CLEC. Kiewit - a privately held company originally ivnested in MFS, which was then acquired by Worldcom. Crowe saw the writing on the wall and at his second chance at Kiewit re-entered the CLEC industry, chairing Kiewit's Level-3 project with a concept and network exclusively geared towards IP-centric facilities. His funding network really has deep pockets, including Warren Buffet..
There is a huge document (slides of more than 100 pages) available at the investor relations section of LVLT where the entire business model and important parameters are documented. An eye opener to me was the significant compression in the cost of IP-centric transmission and switching equipment over time versus nearly zilch of legacy TDM. Now I understand one of the main problems for the competitive fringe...
I think we are in for some "repackaged" IPOs from venture held competitive companies. I hope they learned the lesson and install IP-centric facilities before hitting the market. Sooner or later VoIP will morph the entire current cashflow stream of legacy operators on top of IP networks. In such an environment, owning a lot of CLass-5 TDM switches is a liability, not an asset anymore.
Another twist: while ACCESS to a backbone is nice, it'S even nicier if someone else owns it so your company's FCF won't be burdened. That explains why many "good and solid" CLECs and even RLECs just sold off their backbone.. such as CZN (who bought Electric Lightwave in the mid 1990ies).
However it appears that LVLT cashflow generating capability (with gross margins north of 60%) appears to STEM from their captive ownership of an IP-centric backbone. Maybe or mabye not it might be possible that backbone assets might become valuable again. Would be interesting to track the backbones of companies that later entered bankruptcy.
TouchAmerica (Montana Power) sold the backbone to 360Networks (now privately held) in BK
GST sold the backbone to TWTC in BK
Electric Lightwave sold out to CZN, backbone recently sold to privately held Integra Telecom
....
regarding my comments on improving sector health .. yes, I was referring to the capitalization improvement. The key ratio to me are PSR and EV/R coupled with gross margins. Above 2 this usually means that the street is seeing earnings generation potential. Sooner or later, funds are flowing into a sector. I found it unusual to see ICP/CLECs at EV/R north of 2 but it happened recently..
rgrds
CROSSY |
