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Technology Stocks : LAST MILE TECHNOLOGIES - Let's Discuss Them Here -- Ignore unavailable to you. Want to Upgrade?

To: Frank A. Coluccio who wrote (10484)	2/17/2001 2:22:59 AM
From: axial	Respond to of 12823

Hi, Frank - "So, what you're saying, then, is that the performance expectations of users when it comes to next gen wireless (as well as FTTH) are not synchronized with the reality of build out costs. Right?" Well, no. Not exactly. The beginning point is the capital markets, not the telecomm sector, and not the end user. I am suggesting that the level of debt is at historically high levels, and proportionately, more of that debt comes from one sector than ever before. Last year, we talked about the effects of a recession on the whole sector, and we spoke of the impact on fiber carriers if the wireless sector, for one, did not play its part in filling those new pipes. I am not forecasting doom and gloom, or saying that the sky is falling. What I am suggesting is that we are now a little closer to a scenario where some unknown combination of events could precipitate a domino effect on the whole sector. And further, that the the first domino, being those who bought spectrum and now must install infrastructure, is not too steady. The suggestion is more a reference to world capital markets than it is to the sector. However, my following comments were intended to give reasons for some of that perceived shakiness. Interesting, tonight, to read your post on the early thrust of POTS marketing, and how it emerged from enterprise usage to universal adoption. I am as sure as elmat that eventually UMTS will become a reality. However, I believe the near- and mid-term offers some risk, and a good chance of some delay. Regards, Jim ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ***************** Emphasis added *************** FT.COM SITE: EU BANK REGULATORS PROBE TELECOM BANK LOANS FT.com site, Sep 28, 2000 BY JAMES MACKINTOSH, ALINE VAN DUYN AND DAN ROBERTS European banking regulators are probing $171bn (E194bn) of new loans made to European telecommunications groups, fearing that the banks have lent too much money to the sector. The worries - sparked by loans to fund the cost of third generation mobile phone licences in Europe - were discussed at a meeting of international financial regulators two weeks ago. Several European banking regulators have since launched inquiries and are now questioning the banks they oversee. Sir Howard Davies, chairman of the UK's Financial Services Authority, this week described the level of lending by European and US banks as "a matter of great concern to regulators" because of the risks the banks are taking with one sector. Regulators elsewhere in Europe went further, likening the concentration of debt to the run-up to the 1992 property crash and the 1998 hedge fund crisis, both of which caused major problems for banks.** Regulators have traditionally taken a tough line with banks when they become over-exposed to one sector. They fear that if the telcoms sector is hit by unexpected financial problems, the extent of the banks' lending could cause wider difficulties. The banks which have arranged the most loans to the telecom sector this year are Citigroup, Chase Manhattan, Morgan Stanley Dean Witter, Barclays and HSBC, according to data from Capital Loanware, the data provider. Although not an exact measure of exposure because loans are sold on or refinanced, it indicates the most active players. Almost 30 per cent of this year's international syndicated loan market - where the largest loans were arranged - was taken up by telecom debt. In Europe it was above 40 per cent. The watchdogs' inquiries could result in warnings to the most exposed banks to cut back lending to telecoms companies, further increasing their cost of borrowing. Raising new money has already become more costly for telecoms groups, after cuts in credit ratings led to higher interest rates on their bonds. Telecoms companies in Europe are particularly worried about any clamp down on new borrowing. They need well over E100bn more in order to fund the estimated extra E160bn cost of building networks to run third generation mobile services. "This [probing by regulators] could be a disaster," said one UK telecom executive. A senior UK banker said: "It is our responsibility to make crystal clear that we know our exposures and we understand the risks". He added: "The [watchdogs'] concern is legitimate but any systemic risk [to the financial system] would come from outside chances such as the 3G network just being completed when boom, fourth generation arrives." But bankers are now having to explain to their regulators exactly how they are controlling the risks, in what Sir Howard called "much more rigorous analysis of those exposures". He told a seminar in Prague this week: "Financial sector exposures to the telecommunications industry . . . is a matter of great concern to regulators, certainly across Europe." Copyright © Financial Times group