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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: PDL who wrote (2327)	10/5/1999 4:25:00 PM
From: mts362	Read Replies (1) \| Respond to of 15615

just out of curiousity... how did all this demographic stuff end up on the GBLX thread?

To: PDL who wrote (2327)	10/8/1999 6:40:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 15615

Today's Financial Times story on Global Crossing & DT: Telekom reported in talks with Global Crossing NEWS DIGEST: 08-Oct-1999 01:58:16 am Deutsche Telekom recently held preliminary talks with Global Crossing about a takeover of the fast-growing carrier, according to one person close to the discussions. Although those talks, said to have taken place this summer, came to nothing, they mark the first sign that the German company has approached other US carriers about a deal since efforts to buy Sprint failed. Shares in the remaining independent long-distance carriers have all soared on speculation Deutsche Telekom or BellSouth, another disappointed suitor for Sprint, would move quickly to find an alternative acquisition. Global Crossing, a two-year-old company that burst onto the international telecoms scene this year with a string of ambitious deals, recently completed a Dollars 10bn acquisition of Frontier to boost its US presence. A Global Crossing spokesman said that he was unable to confirm that the talks with Deutsche Telekom took place. The company's stock rose a further Dollars 3 11/16, or 13 per cent, to Dollars 32 3/16 yesterday, taking its total gain since the beginning of the month to around 30 per cent. Other independent long-distance carriers have also soared on the takeover speculation. Qwest, which sold a 10 per cent stake to BellSouth earlier this year and is widely seen as a natural merger partner with it, has risen by one-fifth since news of the Sprint takeover talks first broke. BellSouth's failure in its own bid to buy Sprint over the weekend has led to widespread speculation that it will now turn its attention to another takeover target. However, relations with Qwest have soured since that company made its own bid to acquire US West, another of the Baby Bells. That move led to a precipitate drop in its share price just days after BellSouth took its 10 per cent stake. William Lewis and Richard Waters, New York Copyright © The Financial Times Limited ft.com

To: PDL who wrote (2327)	10/8/1999 6:43:00 PM
From: Anthony Wong	Respond to of 15615

TELECOMS: Small telcos vs large: can David take on Goliath?: MARKET REPORT by Joia Shillingford: One expert believes three forces have created Darwinian conditions within the telecoms sector in which only the fittest will survive Financial Times ; 08-Oct-1999 02:00:05 am Can small new operators really compete against large ones? "They can and have done since privatisation and deregulation," says Paul Cuatrecasas, managing director of investment banking firm ARC Associates. Small companies have a number of advantages. They are flexible, entrepreneurial and quick to spot regulatory and technological opportunities. By contrast, big companies have lots of expertise, lots of capital and an established customer base to which they can sell new services. They are, however, slower at seizing opportunities. Big companies also have difficulty introducing new services that might cannibalise their existing revenues. Mr Cuatrecasas believes the question is not whether new entrants can compete, but which ones will be able to continue to do so in the future. He says: "Three forces have created Darwinian conditions in which only the fittest will survive." The forces are: first, deregulation and privatisation which have created the freedom for new entrants to enter the market. Second, rapid changes in technology driven by innovations from chip and other suppliers (which have lowered the cost of entry). Third, the availability of more capital. As formerly state-owned telecoms companies such as British Telecommunications have been privatised, they have gained greater visibility in capital markets. Newer operators have seen their ability to attract funding and entered the market. Today, funding is also available for new telecoms businesses in the form of venture capital. According to Mr Cuatrecasas, a lot of venture capital money has gone into communications companies. In addition, low interest rates recently have lowered the cost of capital. But capital is not enough to make a new telecoms business succeed. Good management helps. Yet Mr Cuatrecasas warns: "We've seen good management teams fail before. It's easy - but not always true - to say that the companies with the best management teams will win." For example, he says, Cambridge-based fixed wireless access company Ionic had what seemed to be a first-class management team and the market obviously thought so because the company succeeded in raising hundreds of millions of debt and private equity before an initial public offering. It then raised œ600m from the IPO - all on the strength of its management team. If good management is important but not sufficient to guarantee the survival of a small telecoms company, what else is necessary? "There is a question as to how dependent on its choice of technology a telco is," says Mr Cuatrecasas. "UK-based Colt is viewed as one of the most successful telcos in Europe based on its management team's ability to deliver what it says it will. But because technology is changing so fast, no one really knows if Colt's network will be state of the art as customers see it in five to six years' time. Who knows, it could even be a wireless broadband satellite communications system like Teledesic that everyone wants to use." It looks as though the small companies that will be able to compete effectively against larger ones, and therefore grow larger themselves will be those that both have an excellent management time and are wise (or lucky) enough to back the right technology. Well-managed small companies can hold their own against larger ones. But do they have the management skills to take over larger companies and make them work? World markets are becoming more bearish and therefore less favourable to this kind of deal. Jim Ross, telecoms analyst at ABN Amro, says: "Smaller companies buying larger ones is a phenomenon of the later stages of a bull market (where share values are soaring). It is a financial manoeuvre that takes place when the small company's paper (or shares) is highly valued. Investors are effectively saying 'We like this company's management better than the big company's management.'" Such alliances can work, though. "Qwest's acquisition of LCI when it needed a company with real customers and real revenues seems to have worked," says Mr Cuatrecasas. His view is that the success of a takeover of a large telco by a smaller one depends on the latter's ability to take cost out of the business while maintaining or increasing revenues and profit margins. Mergers may be particularly appropriate where there is a sea change in technology which the smaller company is more familiar with than the larger one. One example is US-based Global Crossing combining its knowledge of internet protocol (IP) telephony with Frontier's established user base. It also explains why Qwest, another US IP expert, is combining with US West. "New technology know-how helps but it may not be enough to ensure success," says Mr Cuatrecasas. "Having the right technology or expertise may simply buy the small telco time to make a merger or takeover work. Sometimes it takes longer than expected to get results and that is why some operators have bought several companies - to give them more time to cut costs and increase revenues." But if making a go of a larger acquisition seems difficult, the reverse can be even harder. John Harley, partner for financial advisory services at PricewaterhouseCoopers, says: "There are certainly challenges for a new entrant buying an established telco but it can be even harder for a big company to act like a small fast-moving one. "We often advise traditional telcos moving into new areas to keep acquisitions - such as internet service providers - separate from their main business." In telecoms it seems, the large want to act small and the small, large. ft.com