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

To: SteveG who wrote (10363)	2/19/1999 9:37:00 AM
From: MangoBoy	Respond to of 12468

Faber on CNBC just mentioned Lehman initiating WCII with a 'buy'. no mention of TGNT or NXLK.

To: SteveG who wrote (10363)	2/19/1999 9:52:00 AM
From: MangoBoy	Read Replies (1) \| Respond to of 12468

TGNT upgraded by Legg Mason from 'Outperform' to 'Buy'

To: SteveG who wrote (10363)	2/19/1999 10:22:00 AM
From: MangoBoy	Read Replies (1) \| Respond to of 12468

finally on the wire: DB 07:02 LEHMAN STARTS NEXTLINK, TELIGENT, WINSTAR AS BUYS -REUTERS

To: SteveG who wrote (10363)	2/19/1999 1:45:00 PM
From: SteveG	Respond to of 12468

Lehman Bros - WinStar Communications: Initiating Coverage With A Buy Ticker : WCII Rank(Old): N/A Rank(New): 1-Buy Price : $31 3/4 52wk Range: $48-10 Price Target (Old): N/A Today's Date : 02/19/99 Price Target (New): $53 Fiscal Year : DEC -------------------------------------------------------------------- EPS 1997 1998 1999 2000 QTR. Actual Old New Old New Old New 1st: -1.27A - - -2.54A - -E -3.84E - -E - -E 2nd: -1.85A - - -2.77A - -E -3.70E - -E - -E 3rd: -1.97A - - -2.83A - -E -3.52E - -E - -E 4th: -2.37A - - -3.95E - -E -3.31E - -E - -E --------------------------------------------------------------------- Year:$ -7.49A $ - -E $-12.04E $- -E $-14.37E $ - -E $ - -E Street Est.: $ -E $-11.68E $- -E $-13.82E $ - -E $ - -E --------------------------------------------------------------------- Price (As of 2/19): $31 3/4 Revenue (1999): 441.0 Mil. Return On Equity (99): N/A Proj. 5yr EPS Grth: N/A Shares Outstanding: 47.4 Mil. Dividend Yield: N/A Mkt Capitalization: 1.50 Bil. P/E 1997; 1998 : N/A; N/A Current Book Value: $-6.89 /sh Convertible: YES Debt-to-Capital: 132.0 % Disclosure(s): C ---------------------------------------------------------------------- * We are launching coverage of WinStar (WCII, 31 3/4, 1), with an 1-Buy rating and a price target of $53. WinStar is using high capacity wireless local technology to bypass the RBOCs to provide high speed data and voice services to business customers. * Wireless should be the most cost efficient technology (cheaper than fiber) for mid-sized buildings that account for 50-60% of the lines in WinStar's coverage area. We believe WinStar can carry 60-70% of its traffic on its wireless network where gross margins should be 20-25 percentage points higher than leasing RBOC loops. * The wireless model should prove itself in 1999 with wireless lines increasing from 64k to over 200K and multipoint technology deployment in 50% of the hubs. WinStar's gross margins should improve from 12% to 36% validating the cost benefits of wireless. * We think the chances of wholesale deals or acquisitions by long distance companies increases as the wireless model proves itself, and as demand for high bandwidth services and integrated local and long distance services increases. AT&T and WorldCom paid $12 billion each for fiber CLECs Teleport and MFS ($14B less $2B for UUNet) as those models proved themselves in '96 and '97. * We've valued WinStar using our standard DCF analysis. WinStar trades at about $110/addressable line ($3.3B/30M lines) and 3.5x '99 PP&E which compares to 6x PP&E or $350/addressable line paid for MFS and Teleport ($12B/35 mil lines). Success in the int'l market provides upside to our DCF. --------------------------------------------------------------------- Summary and Description - WinStar is installing high bandwidth wireless local loop technology that should offer a cost competitive/advantaged bypass of the RBOC "last mile" bottleneck for business customers in mid-sized business locations. WinStar is leveraging this asset to build a full service voice, data and internet telecom business targeting business customers. WinStar is the largest holder of fixed wireless bandwidth in the country with spectrum covering over 80% of U.S business office space (Teligent & NEXTLINK (NXLK, 36 3/16, 1) are also large holders with AT&T and Advanced Radio Telecom both holding lesser amounts). WinStar plans to build networks in 60 markets nationwide and 50 int'l markets over the next several years. In addition to local wireless, we expect WinStar to continue to add local fiber to connect its hubs as its doing with MFN in 6 cities today. WinStar also has entered into a 25 year IRU for 4 fibers along 15K miles of Williams' fiber network that will provide it cost efficient longhaul capacity. Teligent WinStar 1999 Revenue Estimate 33M 447M Wireless Spectrum POP Coverage 133M 200M Long Distance Fiber Leased IRU: 4 Fibers, 15kMiles Cities in Operation 23 30 Local Bottleneck Persists for Mid-Sized Businesses - Over the past few years we've seen increasing investment at both the high end of the business market (fiber CLECS) and the residential market (cable modems and ADSL) in bypass technologies. Despite the investment, fiber reaches less than 5% of all buildings and about 25-30% of all lines. We believe that wireless is the cheapest alternative for mid-sized business locations. Demand for high capacity services has driven growth rates of 35-40% in T1s over the past few years pushing RBOC installation times to 30-90 days. We expect this demand will continue driving a four-fold increase in T1 deployment over the next 4 years. We also see the possibility that new bandwidth-enabled applications could drive bandwidth demands much higher over the next several years. High Capacity Bypass Customer Segment # Lines RBOC Tech Tech Acquisitions Residential 100M ADSL Cable AT&T/TCI - $48B Mid Sized Business 25-35M HDSL/SDSL Wireless AT&T/Teleport-$12B Large Business 25-35M Fiber Fiber WorldCom/MFS-$12B Wireless Provides Bypass for 50-60% of Business Market - Based on our analysis we think that wireless provides a cheaper alternative than fiber for mid-sized buildings (25K/50K - 200K sq. ft) which account for 50-60% of the lines in WinStar's coverage area. Fiber costs between $100k-$200k per building vs wireless at about $20,000 which means lower capital costs per T1for mid-sized locations. We think that wireless proves in for 50-60% of the lines with just the linear growth in high bandwidth services (extrapolating today's 35-40% growth in T1s) and we point out that the low incremental costs once installed will provide significant upside as high bandwidth demand accelerates. $Capital/T1 Number of T1's Per Building 3 8 15 30 60 150 Size of Building* (sq ft) 10k 25k 50k 100k 200k 500k Wireless 7k 4k 2.5k 1.7k 1.3k 1.0k Fiber $19k $9k $5k $2.4k 1.0k HDSL/SDSL 2.4k 2.4k 2.4k 2.4k 2.4k 2.4k Leased RBOC T1 19k 19k 19k 19k 19k 19k Assumes a 5x increase in demand and 20% market share for both wireless and DSL. 1999 Should Be Key Year for Proving Wireless Model We believe 1999 will be the key year for proving that the wireless model works and that hitting key deployment milestones will be catalysts for the stocks. Key milestones in 1999: - Wireless lines increasing from 64K today to over 200K by year end. - Multipoint wireless technology deployed in 50% of wireless hubs which should grow from 80-90 today to 180 by year end. Multipoint deployment is important because it provides the most economical and practical architecture for large scale wireless deployment. Point to point works today but multipoint is just being rolled out commercially. - Improvement in WinStar's gross margins from 12% in 4Q98 to 36% in 4Q99. Our level of confidence is supported by recent events: - WinStar has said it has reached 6% penetration in Millenium buildings and that 90% of November and December sales in New York were to wireless buildings. The company has radios deployed on all 1000 Millenium buildings today. - WinStar has said that revenue in New York grew 30% from 2Q98 to 3Q98 and that gross margins improved from 27% to 36% and that NY has reach EBITDA breakeven after 22 months. - Williams Communications Group struck a deal to buy 2% of WinStar's capacity and Lucent has teamed with WinStar to help build the network. Both provide evidence of outside endorsement of the technology. We believe that Long Distance Companies are Potential Wholesale Customers or Acquirers of wireless assets with the chances of deals increasing as the business model proves itself. WinStar and Williams struck the first such deal in December with Williams buying 2% of WinStar's capacity. AT&T and MCI-WorldCom bought high bandwidth fiber CLEC assets that serve the high end (Teleport and MFS) as these models began to prove themselves in '96 and '97. More recently, AT&T struck a deal with TCI to provide high bandwidth services to the low end residential and small business customers. The purchase price for Teleport and MFS was $12B apiece, 6x PP&E and about $350 per addressable lines ($12B/35 million lines. 35 mil lines is the 30% of 90 million total lines that fiber reaches). Acquiring wireless CLEC assets holds many of the same benefits as buying Teleport/MFS - reducing access and unbundled loop charges, end-end control, speed to market, leverage vs the RBOCs to force access prices down across the board and expanded wholesale opportunities. We note that none of the long distance companies have sizeable wireless assets (AT&T has some) and Sprint, Qwest, Level3 and others don't have any (or very little) local assets. Access Savings Could Fund Acquisition - Our analysis indicates that the long distance industry could save $15 billion/year in leased RBOC access costs by 2008 using wireless to bypass RBOC facilities, assuming today's T1 rates of $350/T1, and $5 billion if rates fall to $100/T1 (assuming demand grows to 10X today's level over 10 years). The NPV of the access savings including capital and operating cost is $36 billion at today's rates and $9B if rates drop to $100. This compares to the $9.5B current value of the three CLECs with significant wireless assets. Valuation - We've valued WinStar using a DCF assuming that WinStar captures 5.5% of the $130 billion Year 2008 addressable market (WinStar will cover roughly 70% of the year 2008 $200 billion business telecom market). We also note that we expect that wholesale revenues could reach $1-$2 billion per year which reduces the retail share required. We've used year 2008 EBITDA margins in the high 30%, 14-15% discount rate and terminal EBITDA multiple of 10x - 11x with a 25% public market discount. We believe that the share and EBITDA estimates are reasonable given the cost advantages we expect the wireless technology will provide. CLEC models generally assume that a CLEC captures 7% - 10% market share by the terminal year and has EBITDA margins in the low to mid 30% range. While WinStar is trading at high near term multiples vs other CLECs, we believe that the cost advantages, national scale and scope and strategic value justifies the premium. Teleport and MFS were both purchased for about $12 billion, 6x PP&E or about $350/addressable line compared to WinStar at $110/addressable line. ($3.3B / 30M lines. 30Mil. = 50% cost advantages 70% coverage of US * 90 Mil. business and special access lines). Fully Current FV/Revenue(1) FV/PP&E(2) Price Dil. Shrs. Net Debt FV '99 '00 '01 '99 '00 '01 WinStar $31 3/4 60M $1.4B $3.3B 7.4x 5.5x 4.2x 3.5x 2.9x 2.5x Teligent $34 62M $0.2B $2.3B 70.4x 21.3x 11.1x 6.2x 4.5x 3.8x NXLK $36 3/16 62M $1.4B $3.7B 14.9x 11.6x 9.5x 3.9x 3.2x 3.1x ICIX $20 5/16 49M $2.7B $3.7B 4.0x 3.3x 2.8x 2.2x 2.0x 1.8x ICG $16 1/2 55M $1.2B $2.1B 3.7x 3.2x 2.7x 1.7x 1.6x 1.5x McLeod $34 1/4 80M $0.8B $3.5B 4.0x 3.3x 2.7x 3.9x 3.1x 2.5x Stock prices as of 2/18/99 NOTES (1) Multiples are proforma for projected net debt. Beginning of year firm value vs. next 12 months revenue (2) Multiples are proforma for projected net debt. End of year firm value vs. end of year PP&E. Estimates 4Q98 1Q 2Q 3Q 4Q '99 '00 Revenue 76.1 84.4 98.4 117.4 140.7 441.0 735.8 EBITDA (82.4) (84.1) (85.9) (70.1) (54.8) (294.9) (116.2) Lines 318K 382K 452K 535K 622K 622K 1007K Wireless 63K 85K 115K 157K 208K 208K 509K Lines Wireless 80-90 180 270 Hubs Markets 30 50* 70* In Operation* *Includes 5 int'l. in 1999 and 10 in 2000

To: SteveG who wrote (10363)	2/19/1999 1:56:00 PM
From: SteveG	Respond to of 12468

LEHMAN BROTHERS INC. Teligent Inc: Initiating Coverage With a Buy Rating Ticker : TGNT Rank(Old): 9-Not Rated Rank(New): 1-Buy Price : $34 52wk Range: $44-18 Price Target (Old): $ N/A Today's Date : 02/19/99 Price Target (New): $50 Fiscal Year : DEC --------------------------------------------------------------------- EPS 1997 1998 1999 2000 QTR. Actual Old New Old New Old New 1st: -0.15A - -0.73A - -2.23E - - 2nd: -0.99A - -1.12A - -2.46E - - 3rd: -0.63A - -1.49A - -2.67E - - 4th: -1.21A - -2.01E - -2.80E - - --------------------------------------------------------------------- Year:$ -2.94A $ - $-5.36E $ - $-10.16E $ - $ - Street Est.: $ - $-5.31E $ - $- 8.93E $ - - $ - --------------------------------------------------------------------- Price (As of 2/18): $34 Revenue (1999): 33.2 Mil. Return On Equity (99): N/A Proj. 5yr EPS Grth: N/A Shares Outstanding: 52.6 Mil. Dividend Yield: N/A Mkt Capitalization: 1.79 Bil. P/E 1999; 2000 : N/A; N/A Current Book Value: $1.93 /sh Convertible: None Debt-to-Capital: 82.5 % Disclosure(s): C --------------------------------------------------------------------- * We are launching coverage of Teligent (TGNT, 34, 1), with an 1-Buy rating and a price target of $50. Teligent is using high capacity wireless local technology to bypass the RBOCs to provide high speed data and voice services to business customers. * Wireless should be the most cost efficient technology (cheaper than fiber) for mid-sized buildings that account for 50-60% of the lines in Teligent's coverage area. We believe Teligent can carry 60-70% of its traffic on its wireless network where gross margins should be 20 - 25 percentage points higher than leasing RBOC loops. * The wireless model should prove itself in 1999 with Teligent's wireless lines increasing to about 60K and multipoint technology deployment in 50% of the hubs, which should increase 175 by year end. WinStar's (WCII, 31 3/4, 1) gross margin improvement and deployment should also be a catalyst. * We think the chances of wholesale deals or acquisitions by long distance companies increases as the wireless model proves itself, and as demand for integrated local and long distance services increases. AT&T and WorldCom paid $12 billion each for fiber CLECs Teleport and MFS ($14B less $2B for UUNet) as those models proved themselves in '96 and '97. * We've valued Teligent using our standard DCF analysis. Teligent trades at about $80/addressable line ($2.3B/30M lines) which compares to $350/addressable line paid for MFS and Teleport ($12B / 35 mil lines). Success in the int'l market provides upside to our DCF. --------------------------------------------------------------------- Summary and Description - Teligent is installing high bandwidth wireless local loop technology that should offer a cost competitive/advantaged bypass of the RBOC "last mile" bottleneck and is leveraging this asset to build a full service voice, data and internet product set targeting business customers. Teligent's spectrum covers 50 of the top 60 markets. Teligent plans to build networks in 74 markets nationwide and expand internationally over the next several years. Teligent WinStar 1999 Revenue Estimate 33M 447M Wireless Spectrum POP Coverage 133M 200M Long Distance Fiber Leased 4 Fibers, 15k Miles Cities in Operation 23 30 Local Bottleneck Persists.... (boilerplate - see previous WCII report) ...1999 Should Be Key Year for Proving Wireless Model We believe 1999 will be the key year for proving that the wireless model works and that hitting key deployment milestones will be catalysts for the stocks. Key milestones in 1999: - Wireless lines increasing to 60K by year end. - Multipoint wireless technology deployed in 50% of wireless hubs which should grow from 50-60 today to 175 by year end. Multipoint deployment is important because it provides the most economical and practical architecture for large scale wireless deployment. Point to point works today but multipoint is in the early stages of commercial deployment. - Improvement in WinStar's gross margins from 12% in 4Q98 to 36% in 4Q99 which should validate the wireless economic model. (...more boilerplate...) Valuation - We've valued Teligent using a DCF assuming that Teligent captures 3.5%-4.0% of the $130 billion Year 2008 addressable market (Teligent will cover roughly 70% of the year 2008 $200 billion business telecom market). We also note that we expect that wholesale revenues could reach $1+ billion per year which reduces the retail share required. We've used year 2008 EBITDA margins in the high 30%, 14-15% discount rate and terminal EBITDA multiple of 10x - 11x with a 25% public market discount. We believe that the share and EBITDA estimates are reasonable given the cost advantages we expect the wireless technology will provide. CLEC models generally assume that a CLEC captures 7% - 10% market share by the terminal year and has EBITDA margins in the low to mid 30% range. While Teligent is trading at high near term multiples vs other CLECs, we believe that the cost advantages, national scale and scope and strategic value justifies the premium. Teleport and MFS were both purchased for about $12 billion, 6x PP&E or about $350/addressable line compared to the current valuation of Teligent at $80/addressable line ($2.3B/30M lines. 30Mil. = 50% cost advantaged * 70% coverage of US * 90 Mil. business and special access lines). Estimates 4Q98 1Q 2Q 3Q 4Q '99 '00 Revenue 0.4 1.4 4.1 10.6 17.1 33.2 152.9 EBITDA (78.2) (87.1) (94.7) (98.7) (101.8) (382.3) (362.7) Lines 3K 14K 31K 57K 86K 86K 223K Wireless - 7K 21K 39K 60K 60K 156K Lines Wireless 50-60 175 300 Hubs Markets 15 23* 40 50 In Operation * Currently rolled out

To: SteveG who wrote (10363)	2/19/1999 2:04:00 PM
From: SteveG	Respond to of 12468

LEHMAN BROTHERS INC. NEXTLINK Communications: Initiating Coverage With a Buy Rating Ticker : NXLK Rank(Old): 9-Not Rated Rank(New): 1-Buy Price : $36 3/16 52wk Range: $49 - 10 Price Target (Old): $N/A Today's Date : 02/19/99 Price Target (New): $51 Fiscal Year : DEC ---------------------------------------------------------------------- EPS 1997 1998 1999 2000 QTR. Actual Old New Old New Old New 1st: -0.83A - -1.19A - -2.16E - - 2nd: -0.98A - -1.42A - -2.11E - - 3rd: -1.08A - -1.57A - -2.32E - - 4th: -1.09A - -1.86E - -2.53E - - --------------------------------------------------------------------- Year:$ -3.91A $ - $ -6.04E $ - $-9.12E $ - $ - Street Est.: $ - - $ -6.05E $ - - $-8.88E $ - - $ - - --------------------------------------------------------------------- Price (As of 2/19): 36 3/16 Revenue (1999): 247.3 Mil Return On Equity (99): N/A Proj. 5yr EPS Grth: N/A Shares Outstanding: 52.4 Mil. Dividend Yield: - - Mkt Capitalization: 1.90 Bil. P/E 1999; 2000 : N/A; N/A Current Book Value: $-2.63 /sh Convertible: YES Debt-to-Capital: 110.0 % Disclosure(s): C ---------------------------------------------------------------------- * We are launching coverage of NEXTLINK (NXLK, 36 3/16 ,1) with a 1-Buy rating and a price target of $51. NEXTLINK is building a national end-to-end local and long distance network using fiber and broadband wireless to bypass the RBOCs to provide high speed data and voice services to business customers. * NEXTLINK is building a set of end-end assets that few others have. We believe the value of this national network will increase as demand for high bandwidth service accelerates and as demand for integrated local/long distance services pushes the long distance carriers to add local capabilities. * This end-to-end multi-technology network should provide the most cost efficient method of reaching all but the smallest business locations. This should allow NEXTLINK to carry up to 70% of its traffic on its network where gross margins are 20 to 25 percentage points higher than leasing RBOC loops. * Catalysts include: continued strong execution, the success of their wireless deployment as well as WinStar (WCII, 31 3/4, 1) and Teligent's (TGNT, 34, 1) wireless deployment and the increasing possibility of long distance company or RBOC wholesale deals or acquisitions. * We've valued NEXTLINK using our standard DCF analysis. NEXTLINK's current firm value is $3.7B which is 4x YE '99 PP&E. This compares to MFS and Teleport, the other two large national CLECS, which were both bought for about $12B or 6x PP&E. --------------------------------------------------------------------- Summary and Description - NEXTLINK is in the process of building a nationwide long haul and local network in the top 30 U.S. markets, using both fiber and wireless. No other company has put this set of assets together. NEXTLINK is building just the third, and only independent, nationwide local fiber network. AT&T and MCI WorldCom own the other two and they have little wireless (AT&T has some wireless and Williams now owns 2% of WinStar's network). We believe that the combined long distance and fiber and wireless local assets gives NEXTLINK the ability to carry up to 70% of its traffic on its own network. Local Fiber - NEXTLINK's local fiber networks are its crown jewel. NEXTLINK is operational with 2150 miles of local fiber networks in 10 of the top 30 largest markets today and 36 cities overall, currently over 750 buildings are connected to the fiber network. Plans are to expand to 20 major markets by the end of '99, and 30 by the end of 2000. Local Broadband Wireless - The company recently purchased 40 LMDS (28 Ghz) licenses from WNP group to add to the 42 LMDS licenses it held. NEXTLINK now has licenses that cover 136M POPs, 27 of the top 30 markets and 39 of the top 50. The company plans a limited rollout of its wireless network in '99 with more extensive deployment in '00 and '01. Long Distance Fiber - NEXTLINK has bought 24 fibers, one empty conduit and options on additional fiber, on Level 3's 16K mile nationwide long distance network. This network is planned to be complete in '01. NEXTLINK focuses on selling a bundled product of local/LD (and data in '00)- to business customers. The company has recently begun to sell internet access, and plans to ramp its data product initiatives later this year and into '00 as its long haul network becomes operational. NEXTLINK has a solid financial track record, meeting analyst expectations each quarter since its IPO. Revenue is currently growing at a 70-80% annual rate and we expect 3-Year CAGR of 65%. We estimate that the company will hit its low point EBITDA loss in 4Q99 or 1Q00 and hit EBITDA breakeven in late '02. Craig McCaw owns about 1/3 of NEXTLINK's stock and has voting control. NEXTLINK Qwest WinStar 1999 Revenue Estimate 247M 3.5B 437M Local Fiber 2150 Route Miles none Some in 6Cities Leased from MFN Wireless Spectrum Pop Coverage 136M none 200M Long Distance 24Fibers, 48 Fibers, 4Fibers, Fiber 16kMiles 18.5k Miles 15kMiles Major Markets 10 fiber 70+ long distance 30 wireless In Operation Local Bottleneck Persists... (...boilerplate...) ...Fiber/Wireless Provides Bypass for Majority of Market- Based on our analysis we think that the combination of fiber and wireless will provide the cheapest bypass for all but the smallest buildings. Fiber costs between $100k-$200k per building and is most economical for very large buildings and wireless costs about $20,000/building which means lower capital costs per T1 for mid-sized locations. 1999 Should Be Key Year for Proving Wireless Model We believe 1999 will be the key year for proving that the wireless model works and we think NEXTLINK's, WinStar's and Teligent's success will be a catalyst for NEXTLINK. Key milestones in 1999: - Wireless lines increasing from 64K today (WinStar) to 270K by year end (WinStar + Teligent). - Multipoint wireless technology deployed in 50% of Teligent's and WinStar's hubs. Multipoint deployment is important because it provides the most economical and practical architecture for large scale wireless deployment. Point to point works today but multipoint is just being rolled out commercially. - Improvement in WinStar's gross margins from 12% in 4Q98 to 36% in 4Q99. (...boilerplate...) ...We believe that Long Distance Companies are Potential Wholesale Customers or Acquirers of national fiber and wireless assets with the chances of deals increasing as 1) the wireless model proves itself, 2) demand for high capacity services grows and 3) the demand for integrated local/long distance services pushes the long distance companies (including the incumbents, Qwest, Level 3 and others) to add local capabilities. As RBOC's move closer to entry into long distance we think long distance company's need for integrated local and long distance products increases. (...boilerplate, see WCII post...) Valuation - We've valued NEXTLINK using a DCF assuming that NEXTLINK captures 5% share of the $100 billion Year 2008 addressable market (so far NEXTLINK plans to cover the top 30 markets or roughly 50% of the year 2008 $200 billion business telecom market). We also note that we expect that wholesale revenues could reach $1+ billion per year which reduces the retail share required. We've used year 2008 EBITDA margins in the high 30%, 14%-15% discount rate and terminal EBITDA multiple of 10x - 11x with a 25% public market discount. We believe that the share and EBITDA estimates are reasonable given the cost advantages we expect that national fiber and wireless technology will provide. CLEC models generally assume that a CLEC captures 7% - 10% market share by the terminal year and has EBITDA margins in the high 20% range to the mid 30% range. While NEXTLINK is trading at high near term multiples vs other CLECS we believe that the cost advantages, national scale and scope and strategic value justifies the premium. Teleport and MFS were both purchased for about $12 billion, 6x PP&E or about $350/addressable line compared to the current valuation of NEXTLINK of $125/addressable line and 4x YE '99 PP&E. (...boilerplate, see WCII post...) Estimates 4Q98 1Q 2Q 3Q 4Q '99 '00 Revenue 43.1 50.1 57.5 65.6 74.2 247.3 409.6 EBITDA (41.4) (47.0) (52.6) (58.8) (65.1) (223.4) (224.4) Lines 174.2 216.1 259.5 305.4 354.6 Major Markets 10 20 30 In Operation Total Cities 36 45 60 BUSINESS DESCRIPTION: NEXTLINK is building a national end-to-end local & long distance network using fiber and broadband wireless to bypass the RBOCs to provide high speed data and voice services to business customers.