<A> Winstar Up 6%; FCC Clearances, Teligent Talk Cited
By Brian Steinberg
(NEW YORK) Dow Jones--A series of clearances from the Federal Communications Commission and a positive spotlight on a rival company appear to be pushing the shares of Winstar Communications Inc. (WCII).
Winstar is an alternative phone-service provider that offers telecommunications services through microwave technology.
The FCC is poised to eliminate certain barriers that could have limited Winstar's microwave-spectrum licenses in Florida and New York, said NationsBanc Montgomery Securities Inc. analyst William Vogel, who Friday revised his share-price target to 60 from 41.
Winstar shares were up as much as 8% earlier before settling back to an increase of 6.3%, up 1 9/16 to 26 1/2 on Nasdaq-listed volume of 2 million. Average daily volume is 1 million. Earlier, the shares traded at a 52-week high of 27 1/16, surpassing the previous high of 26 5/8 set Oct. 15.
"What this does is make WinStar more powerful as a franchise, and it creates visibility on a very important front," Vogel said.
That front is Winstar's potential battle with Teligent Inc., the upstart wireless phone provider headed by former AT&T Corp. (T) President Alex J. Mandl.
Teligent, of Vienna, Va., recently distributed its prospectus for an initial public offering, which analysts expect to be held sometime before Thanksgiving. In the meantime, Teligent officers, including Mandl and Kirby G. Pickle Jr., the company's president and chief operating officer, are on a road show to hawk the company to investors.
Currently, Teligent is a unit of The Associated Group (AGRPA, AGRPB) of Pittsburgh.
The technology involved seems novel: Instead of having to dig up ground to connect offices to cable and wires, both companies simply need to position a digital radio dish on the roof of client buildings.
But Winstar, which is based in New York, has a lead time of 18 months to two years on Mandl's venture.
According to NationsBanc's Vogel, Winstar holds more powerful licenses in more top U.S. markets than Teligent.
Although the FCC decision isn't final, it would clear the way for Winstar to become more aggressive in building its system.
But other analysts suggest that talk about Teligent in the marketplace is driving Winstar's stock. With information getting out about the microwave technology, investors are looking at all options, analysts said.
"Investors are beginning to recognize that Winstar is a very attractive way to play local-exchange competition," said ABN AMRO Chicago Corp. analyst Kenneth M. Leon. "It's traded at a discount to the (rest of the sector)."
But Vogel demurred at the suggestion that Teligent's buzz was moving rival Winstar.
"The Teligent road show has been well-publicized, and their prospectus has been out there," he said. "Teligent today is in Colorado. I don't think the Denver, Colo., investment community is pushing up Winstar."
W. Jack Reagan, an analyst with Legg Mason Wood Walker Inc., has said he expects the Teligent IPO to push Winstar shares into the $30 to $32 range.
According to a Winstar spokesman, Vogel's note, which reiterates a buy rating, and the FCC news are driving the shares.
"Winstar for the last few weeks has underperformed the group," said Leon. "Winstar is going to be a major player, and Teligent will be as well."
|
