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Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: limtex who wrote (11894)	4/17/2000 2:51:00 PM
From: DubM	Read Replies (1) \| Respond to of 12468

TRADE IDEA-Buy WinStar senior discount notes - KDP NEW YORK, April 17 (Reuters) - Several factors warrant the purchase of the new 10-year senior discount notes of high-capacity telecommunications services provider WinStar Communications, Inc. (NasdaqNM:WCII - news), KDP Investment Advisors, Inc. said in a recent report. A good business plan execution, enhanced liquidity, expected improved operating fundamentals and potential to join a larger company warrant the purchase, Montpelier, Vt.-based KDP said. ``With good execution of its strategy to date, including the ramp up in the number of buildings and 'on-net' connections, we expect the company to continue to aggressively increase its market penetration and make opportunistic acquisitions to enhance its communications product lines,' KDP said. WinStar provides small- and medium-sized businesses with services across its national broadband network. Broadband refers to high-capacity Internet data links that offer fast delivery and constant connections allowing consumers and businesses to make phone calls, watch videos and perform other activities that are difficult using conventional ``dial-up' Web connections. ``We continue to believe that WinStar, as one of the largest remaining independent CLECs (competitive local exchange carriers), is an attractive candidate to affiliate with a larger telecommunications entity seeking to quickly establish a local market presence,' the report said. It operates mainly as a CLEC. Indeed, KDP said, CLEC revenues of $356 million in 1999 constituted 80 percent of WinStar's total revenues for the year. KDP said WinStar should have local area networks serving 60 U.S. markets by the end of 2000, up from 45 a year earlier, and 50 international markets by 2004. The costs of this ``aggressive build-out,' however, should keep WinStar's EBDIT (earnings before depreciation, interest and taxes) negative in 2000. It was negative $275 million in 1999, and should be negative $91 million in 2000, but positive $82 million in 2001, KDP said. WinStar is recapitalizing the debt side of its balance sheet. In March, it sold about $1.6 billion of notes. It is using these mainly to buy back or exchange existing debt and preferred stock. It obtained its first bank credit facility, totalling $1.15 billion. KDP estimates WinStar's current liquidity at $3.3 billion. KDP said WinStar's competitors include AT&T Corp. (NYSE:T - news), MCI WorldCom Inc. (NasdaqNM:WCOM - news), Sprint Corp. (NYSE:FON - news) and Time Warner Telecom Inc. (NasdaqNM:TWTC - news), and fixed wireless services such as NEXTLINK Communications Inc. (NasdaqNM:NXLK - news) and Teligent Inc. (NasdaqNM:TGNT - news). Though KDP considers WinStar a worthwhile candidate for a joint venture, it said the company ``can prosper as a stand alone entity given our expectation for growing EBDIT generation and improving cost position as markets are built out using its relatively low cost wireless technology.' WinStar's $1.6 billion debt sale on March 27 included $451 million of 10-year senior discount notes yielding 14.75 percent to maturity, and $635 million of dollar-denominated 12.75 percent 10-year senior notes. Prices of these notes fell in secondary trading. Moody's Investors Service rates the notes B3. Standard & Poor's rates them B-minus.