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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: S100 who wrote (10609)	4/14/2001 12:45:06 PM
From: S100	Read Replies (1) \| Respond to of 34857

snip --France Telecom may be the relatively lucky one. It's initial public offering of Orange earlier this year was a bomb, raising far less cash than the firm had initially hoped. Then again, says Standard and Poor's credit analyst Guy Deslondes, "At least the money is already in the house." Both BT and Deutsche Telekom have talked about similar public offerings of their wireless divisions to raise cash, but just who's going to buy all these new tech stocks now? If IPOs and asset sales won't do the job, that leaves some pretty tough choices. Analysts speculate that BT might cut dividends or issue more shares at cut-rate prices in a rights offering. (BT did have some good news last week; it is reportedly close to selling its Yell online yellow pages in a private sale worth as much as $4 billion.) Another possibility is that the large telecom operators' credit ratings might fall into bbb range — the last bracket before junk-bond status — which would make it more expensive for them to finance future investments. Little wonder, perhaps, that some shareholders are calling for the heads of BT chief Peter Bonfield and Deutsche Telekom boss Ron Sommer. Now imagine that the stock market miraculously recovers next week and everybody gets to cut their debt in half. There's still the sticky matter of whether 3G is actually going to work as advertised. The phones themselves exist mostly in the minds of engineers. Among the technical concerns is the fact that UMTS will at first be available only in urban centers. So you'll need a phone that works with existing standards, too, says Durlacher's Müller-Veerse. Such multiband phones will be more expensive at a time when operators are desperate to get away from subsidizing the cost of handsets. And they'll require more power, which could mean carrying around extra batteries or lugging a bigger phone. The danger is that while the lab geeks are perfecting the handsets consumers will find other technologies that suit them just fine, allowing them to put off taking the plunge on 3G until a 4G comes along. John Moroney of Ovum, a consultancy specializing in telecoms, expects it could take five years before 3G becomes a serious consumer business. "There's already an existing good alternative: second generation voice plus sms text messaging," Moroney observes. Then there's so-called 2.5G, which transmits data in a similar fashion to UMTS, but with more limited bandwidth. The innovative Japanese operator NTT DoCoMo, meanwhile, has designs on importing its own version of next-generation wireless to Europe. The really fun stuff like video streaming might come first through something called a wireless LAN, a network available in designated areas like cafés and hotels. Just think of a coffee shop as the new phone booth. So is it abandon hope, all ye who own BT shares? Maybe not. France Telecom, Deutsche Telekom and BT all trade for less than half of their 52-week highs. So their share prices already reflect a lot — although perhaps not all — of the bad news about 3G. These big operators still have deep resources to help them survive the near-term shock of paying for UMTS. Deutsche Telekom generates billions in cash from operations, and last June was able to issue the largest-ever corporate bond, to the tune of $15 billion. Telekom's record was broken this year by none other than France Telecom. And 3G could eventually create all kinds of new opportunities for profits. Operators will be able to create unique services — from video games to real-time sports scores — which can reap higher margins than old-fashioned voice. Just as important, wireless executives are beginning to look for ways to reduce the cost of building the UMTS networks, which Durlacher says could add another $126 billion to the 3G price tag. BT has indicated that it would be interested in sharing costs with other operators. In Germany, the chief regulator of wireless is reportedly considering allowing some of the winners of that country's licenses to get together somehow. That's bad news, by the way, for telecom equipment makers like Nokia, which is on the hook for 3G as well. The firm announced last week that it is loaning $1.8 billion to France Telecom as part of a package to build UMTS networks. Nokia, like its clients, must figure that the only thing more expensive than buying into 3G might be not buying at all. time.com