risky but rewarding maybe

iiNet: risky but rewarding, maybe
Contributed by Stuart Corner
Saturday, 15 July 2006
http://www.itwire.com.au/content/view/4973/127/
Micro cap specialist research firm, MicroEQUITIES, has selected iiNet as a "risky but potentially lucrative" share for
inclusion to its micro|report recommended portfolio, following iiNet's drop in market value of more than 70 percent during
the last eighteen months.


According to MicroEQUITIES' analysts, "iiNet has the largest deployed ADSL2 network in Australia with over 210
exchanges built. MicroEQUITIES believes that whilst iiNet stock has an inherently high risk profile, the potential reward
should iiNet turn around its financial and operational underperformance is also quite considerable.




MicroEQUITIES says it values the strategic deal between iiNet and Powertel as a positive development, because it will
permit increased monetisation of iiNet's expensive but rapid ADSL 2 network and allow iiNet to leverage its infrastructure,
albeit by opening its network to competitors.




Furthermore, MicroEQUITIES believes that the upcoming ULL pricing decision is, on the balance of probabilities, likely to
have a more favourable outcome for Telstra's competitors than for the incumbent operator.




According to the firm's micro|report micro cap-focussed investment newsletter "there is a significant chance that iiNet's
stock may at some stage become involved in merger & acquisition activity as Amcom and PowerTel's holdings represent
investments with different agendas and either of these entities could access the necessary financial resources needed to
put a deal together."

iiNet will hold a five percent weighting in MicroEQUITIES' micro|report recommended portfolio. Other companies
currently covered by MicroEQUITIES are Hostworks, Integrated Research, KLM Group, M2 TELECOMMUNICATIONS
and Becker Entertainment.