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Technology Stocks : Leap Wireless International (LWIN) -- Ignore unavailable to you. Want to Upgrade?

To: Jim H who wrote (445)	7/26/1999 12:48:00 PM
From: Lance Bredvold	Read Replies (2) \| Respond to of 2737

I have been paying close attention as a non insider to the buildout by Nortel of an isolated system in a fairly wealthy town of 50,000. It just recently went operational and I was surprised to find 1.) that 4 base stations were constructed (I would have thought 2 would be enough from the effective radii of a station I had been assuming) 2.) that the local managers/sales people have repeated to me several times that each base cost approximately $400,000 (I had been assuming $200,000) 3.) that 3 of the 4 locations were on existing buildings or water towers rather than towers. I drove by the one tower and found it sat immediately adjacent to a much higher lattice tower (perhaps 300 ft) which was guyed but that this unit was about 150 feet free standing and quite attractive. Again and again as I drive across the country I see several towers all apparently leasing from a single land owner--in a swamp in Mississippi I actually saw 3 towers all together and one more site being prepared with steel on the ground. There is a trend toward selling these properties I believe to companies which specialize in site ownership and maintenance (wasn't it Omnipoint which announced the bulk sale of most of its towers to someone?) and I also believe there is a trend toward colocating antennas on single elevated sites. Often in populated areas the zoning authorities are requiring this colocation, but it also makes sense on an economic basis. The place towers (and expensive tall ones at that) still have, it seems to me, is the current buildout along highways. Operators have concentrated on building out populated areas first, but now must fill in the spaces between. I guess Leaps marketing plan is as a latecomer, they know it will be a long time if ever before they can fill in these spaces and so find it better to develop a market which does not include roaming. Kind of looks to me like the Sprints, T's, Omnipoint and perhaps Nextwave (in the future) have coopted the large national footprint idea and roaming agreements must be messy and getting messier with exclusive rights (just guessing) or preferential treatment and such with the advantage to bigger companies. The particular system I am following is up to 23 subscribers after one month of operation. I think those subscribers ought to be worth nearly as much as cable subscribers which are being sold for approximately $4000 each (although a lot of discussion could be made over the differences). 23 * $4000 = 92,000. So if this particular company has invested $2 mm in the base stations, sales office, training, etc. It's clear to me that they have a moneymaker. If the system could get 2.5% of the pops (I believe Cricket was pleased to report that large a percentage) ie. 1250 subscribers (and the figures I remember suggest well over 1000 subscribers per base station is possible--at least in China), they would have a system which could perhaps be sold for $5 mm. Incidentally, the new licenses granted to Leap include the city I am case studying and I am very curious how they will enter (buy use of the existing co's capacity, buy the existing co., build a whole separate CDMA system, or what). On a slightly different topic, I keep getting an irrational fear that the FCC decision with various requirements is bad. But when I analyze it, I have to see that I am looking primarily as a Q holder (as I expect many of you are) and there is really nothing which limits Leap very much. It is all give up control over Leap by the Q leaving Leap with more options than they had before. I suppose the one exception is the requirement that not over half of Leaps debt can be from the Q meaning they must develop other sources which may or may not be available and the Q can't just dump money in here indiscriminately (as I rather assumed they would if things really got tough). Next important topic for me is Chile. Seems to me more money is invested there than anyplace else ($100 M) and the previous operators just didn't see a future. I am thinking of the curious explanation made by Leap management in the recent quarterly report for poor subscriber growth. My interpretation is that the operator just stopped paying bills or buying advertising as their resources dried up. Sincerely, Lance