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Technology Stocks : Loral Space & Communications
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To: dougjn who wrote (2421)4/2/1998 1:45:00 PM
From: Valueman  Read Replies (3) of 10852
 
A few points--you say,"Maybe the result will be that I* will pay off the balking locals in some way." They are--they are offering options on the stock. That is very expensive payment and dilutive as well.

A close read of Loral's 10-K reassures me that the majority of G*'s revenues are destined to come from local/regional calling. That means that the charges will be reasonable(affordable) for the local population. The worries over tail charges on long distance calls are unfounded. Read the 10-K yourself. A local call will have a completely different cost make-up than a long distance call. G* will excel here. It only makes sense--people in India will call Indians, people in China will call fellow Chinese, etc.

I also agree that in the case of long distance calls outside the gateway area, the local service provider, as well as the gateway operator are going to make sure they are using the most possible capacity on those satellites passing over their territory. They will deal--I assure you! If the demand is for long distnce at "x" price, then they will lower the price to that level. All of this spells well for G* who will collect the same fee regardless, until pressure reaches a point where they must lower rates. We will see how it unfolds.
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