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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (7692)	10/2/1999 1:05:00 PM
From: djane	Respond to of 29987

Barron's positive on Bell Atlantic/VOD interactive.wsj.com In the dicey telecommunications sector, Bell Atlantic has been a standout this year, rising 22% to 66 3/8, while companies like BellSouth, SBC Communications, AT&T and MCI WorldCom have declined. Bell Atlantic has done well lately, gaining two points last week, amid rising enthusiasm about its plans to combine its wireless operations and those of GTE with Vodafone's U.S. cellular business to create the largest national wireless company. Bell Atlantic is due to merge with GTE in early 2000 pending regulatory approval. For a long time, Bell Atlantic was viewed as one of the least attractive Baby Bells because of its vulnerability to competition from more nimble alternative telecom providers in its core urban markets on the East Coast. As a result, Bell Atlantic possessed one of the lowest P/Es in the group. But sentiment has turned more positive on Bell Atlantic for several reasons. "When you look through the pending transactions, principally the GTE merger and the Vodafone deal, Bell Atlantic will emerge as by far the largest player in the wireless and wireline industry. And it still trades at a relatively reasonable multiple," says Rob Donahue, who leads the media and telecom coverage at Salomon Brothers Asset Management. The combined Bell Atlantic, GTE and Vodafone wireless business will have 20 million subscribers, making it nearly double the size of No. 2 AT&T and four times as large as No. 3 Sprint PCS. Importantly, the Vodafone deal will give Bell Atlantic a national footprint, allowing it to offer more competitive packages to consumers and cut "roaming" payments made to other cellular companies when Bell Atlantic subscribers make calls outside the company's service area. Vodafone is contributing the U.S. cellular business formerly controlled by AirTouch Communications, which Vodafone bought in June. Donahue says Bell Atlantic, which now trades at 20 times projected 2000 profits of $3.20, could hit 85 in the next year. Bell Atlantic last week also sought formal regulatory approval to get into the long-distance market in New York. And the company plans an aggressive rollout of Digital Subscriber Line (DSL) high-speed Internet service in 2000 to its 42 million customers in order to compete with Excite@Home and the cable companies. Bell Atlantic aims to have 100,000 DSL subscribers by yearend and 500,000 by the end of 2000, although there are some doubts on Wall Street whether Bell Atlantic and the other Baby Bells can hit their DSL goals because of equipment and personnel shortages. DSL revenues aren't expected to be significant until 2001. The popularity of DSL -- high-speed Internet access over regular copper phone lines -- remains to be seen. But the valuations of the Baby Bells seem to reflect low expectations for DSL, in contrast to cable companies, which have morphed into broadband Internet plays. Dan Reingold, the telecom analyst at Merrill Lynch, believes Bell Atlantic's profit growth could average 15% annually in the next five years, and that the Vodafone deal could enable Bell Atlantic to issue a valuable tracking stock for its wireless operations. There still are risks with Bell Atlantic given the potential erosion in its core franchise. But even with its appreciation this year, it trades in line with the other big Baby Bells. A cheaper way to play Bell Atlantic is through GTE, which at 76 3/4 trades at about a four-point discount to the current value of the Bell Atlantic takeover offer of 1.22 shares of its shares for each GTE share. There's a danger, of course, that the GTE deal falls apart, but Wall Street puts a high likelihood on the merger getting completed next year.