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Strategies & Market Trends : Investment in Russia and Eastern Europe -- Ignore unavailable to you. Want to Upgrade?

To: Tavros who wrote (495)	8/23/1998 8:49:00 AM
From: Racso	Read Replies (1) \| Respond to of 1301

Substantially all of GTSG's revenue derives from Russia and the former Soviet Union. I am quoting from the latest 10-K. GTSG bears all the financial risk in all of its significant former Soviet Union ventures [except one], again a quote from the latest 10-Q. GTSG began its former Soviet Union business back in 1986 so it has had time to prove itself. However, revenue, subscriber and minute usage growth have consistently slowed down during the last few quarters. As recent as the last IPO back in July the company was portrayed by some brokers as a safest Russian play. There is indeed an investor segment which has focused narrowly on the European network growth angle. But according to a recent broker report, EBITDA cash flow from the former Soviet Union will still be 60% of total by 2003. You either believe this and worry about Russia's impact on the company or dismiss it and worry about a company trading at 27 times its year 2000 European network cash flow. On your comparison with other European telecom growth stories, WCOM trades at 11.5 times 1999 estimated cash flow and has net earnings vs 32 times 1999 estimated cash flow for GTSG with zero net earnings. WCOM price/book is 4.3 vs 10.2 for GTSG. QWST is expected to have net earnings next year, GTSG only in 2003 according to the same broker.