Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Broadband Wireless Access [WCII, NXLK, WCOM, satellite..] -- Ignore unavailable to you. Want to Upgrade?

To: MangoBoy who wrote (534)	8/5/1999 11:09:00 AM
From: SteveG	Read Replies (1) \| Respond to of 1860

somewhat OT convergence news: AT&T/BRITISH TELECOM TO PURCHASE 33% OF ROGERS CANTEL AS SECOND M&A EVENT HITS CANADIAN... Deutsche Banc Alex. Brown - US Equities Jeffrey L. Hines,Bo Fifer August 05, 1999 --------------------------------------------------------------------------- ---- BCE MOBILE COMMUNICATIONS INC. [BCX] "MKT. PERFORM" CLEARNET COMMUNICATIONS INC. [CLNTF] "STRONG BUY" MICROCELL TELECOMMUNICATIONS INC. [MICTF] "STRONG BUY" ROGERS CANTEL MOBILE [RCN] "BUY" AT&T/British Telecom to Purchase 33% of Rogers Cantel as Second M&A Event Hits Canadian Wireless Market in One Week--We Believe Positive for Rogers Cantel the Company but Perhaps Not the Stock--Reiterate Top Views on CLNTF and MICTF --------------------------------------------------------------------------- ---- 52-WK Earnings Per Share FY Price Price 3-5 Yr Est. Ticker End 08/05/1999 Range 1998 1999 2000 Growth Chg? BCX 12 38.56 39-22 0.00A 0.18 0.41 N CLNTF 12 16.69 19-6 (10.93)A (9.75) (8.38) N MICTF 12 10.38 11-4 (7.65)A (6.98) (5.71) N RCN 12 22.56 26-7 (0.85)A (0.46)P 0.18P Y --------------------------------------------------------------------------- ---- All EPS estimates in C$. HIGHLIGHTS: --AT&T/British Telecom announced Thursday (5-Aug) plans to purchase a 33% interest in Rogers Cantel, a Canadian wireless operator that has never quite lived up to expectations. The announcement removes perhaps the last strong event reason (in our opinion) to own RCN shares (i.e., the chance of an M&A event) relative to other Canadian wireless plays. --The announcement comes on the heels of last weeks (30-July) announcement that Bell Canada was purchasing the 35% minority interest of BCE Mobile that it did not already own. We note that in a "separate" transaction announced Thursday, British Telecom is also purchasing 30% of AT&T's 31% interest in AT&T Canada. --PRICE TAG: Too low in our opinion. Cantel, like BCE Mobile, suffers from being majority owned by another company (Rogers Communications) and a spotty track record of execution. The price being paid for the 33% interest (which will include 27.8 million newly issued common share equivalents and 12.3 million shares to be purchased from Rogers Communications, previously the 80% owner of Cantel) is C$34.70 (approx. US$23.28) cash. This implies a 13.3x and 11.7x our 1999 and 2000 estimates of cash flow of C$426 and C$487 million. This is less than the 14.5x and 12.4x that we believe Bell Canada purchased BCE Mobile last week. We again question both the timing (at the very moment that the market is beginning to take off) and price (too low) of these transactions and again point toward the awkwardness of owning a "stub" issue of a Company controlled by others. --BULLISH FOR CANTEL THE COMPANY, BUT PERHAPS NOT THE STOCK: In our opinion, the announcement strengthens a decade-old relationship between AT&T and Cantel (Cantel markets its service under the name Cantel-AT&T) with the added benefit of bringing British Telecom on board as well. The transaction brings close to C$1.0 billion of cash into Cantel and significantly improves its balance sheet and hence financial position. However, with AT&T and British Telecom (33% interest in Cantel) and Rogers Communications (51%) now all owners of the Company, and involved in other telecommunications ventures across the market, it raises the issue of public shareholders (15% interest) of RCN owning a stub of a company owned by others involved in other ventures across Canada. --STOCK PRICE PERFORMANCE: YTD, RCN is up 85% versus a 53% gain in our Cellular Index and ahead of both the S&P500 (up 6%) and the Toronto 300 (up 7%). --NET-NET: Increased M&A in the Canadian market is now a reality. Maintain STRONG BUY investment ratings on the shares of CLNTF and MICTF the only two independent players in the market, both with strong management teams. Based on our DCFs, our 12-month price objectives are US$33 for CLNTF, US$19 for MICTF.

To: MangoBoy who wrote (534)	8/5/1999 1:37:00 PM
From: MangoBoy	Respond to of 1860

[RCN Corporation Sees Positive Economic Impacts From Today's FCC Ruling] PRINCETON, N.J., Aug. 5 /PRNewswire/ -- RCN Corporation announced today that it foresees positive impacts from today's Federal Communications Commission (FCC) ruling adopting new rules reforming the access charges paid by long-distance carriers for use of the facilities of local exchange carriers (LECs). The FCC today adopted new rules establishing a framework through which LECs can obtain pricing flexibility for special access services. "Special access" services are dedicated, high-capacity transmission facilities typically used by other telecommunications carriers. As a customer of special access facilities, RCN believes it may soon be able to obtain reduced prices from LECs and other vendors as a result of this new pricing flexibility. "As a user of high-capacity telecommunications facilities, we are always interested in obtaining more competitive prices from our vendors," said Bruce C. Godfrey, RCN Executive Vice President and Chief Financial Officer. "However, we hope the FCC will take care to limit this pricing flexibility to those markets in which competitive alternatives to LEC services really exist -- which include the markets currently served by RCN's facilities-based alternative to the incumbent local phone providers. Otherwise, LECs could engage in discriminatory pricing that would harm, not promote, real competition." Separately, the FCC is also considering a plan recently filed by a coalition of long-distance carriers and LECs for the restructuring of access charges. Among other things, this proposal would increase the monthly subscriber line charge paid by residential consumers to $5.50 as of January 1, 2000, with phased increases to $7.00 by July 1, 2003. The plan would also eliminate so-called "PICC" charges on residential lines, and reduce (eventually by half) the per-minute access charges paid by long distance carriers. The proposal is supported by a coalition of six large telecommunications companies, including Bell Atlantic and SBC Corporation, the parent company of Pacific Bell. RCN's preliminary analysis shows that the coalition plan would be beneficial to RCN. "In this proposal, our largest competitors are basically offering to increase their prices for one of our core services, residential local phone lines," Godfrey said. "This will make our services even more attractive to consumers. The proposed reduction in per-minute access charge revenues, which would be phased in over several years, should be offset by a reduction in access costs for our long-distance operations as well as increased usage volume." Godfrey cautioned, however, that all of the impacts of the access reform proposal are not yet known, and that the proposal could face substantial opposition and possible changes during the process of FCC consideration.