controversial valuation, page-3

Sorry about another blunder, but here are the figures with net debt of $64.4m. Same as Grant's but hopefully easier to read.

M   V$m   Share Price

 4   55.6   11.0
 6  115.6   22.8
 8  175.6   34.7
10  235.6   46.6
12  295.6   58.4

Onto sustainability.

On current figures Australia with 423,600 services ranks #23 in worldwide broadband penetration, behind Estonia (a relatively recent convert to running water).

So with such low penetration, UEC with arguably the best bandwidth in the country should continue to experience healthy growth.

A key cost element for new connections is distance from a POP (SAP, whatever). So it follows that the bigger UEC's growing footprint, the cheaper it is to connect.

Another cost is real estate for closets in exchanges or skyscrapers. Whenever the switch-routers residing there are underutilised, that new connection cost is free.

It costs next to nix to keep existing services up. A great help when renewing these 3 year contracts.

So like-for-like opEx/Sales should DROP. With clear benefits for EBITDA.

Any apparent OpEx spurt should be for new products. That should dissipate with time.


As typically any new sale brings recurring revenue in perpetuity, in theory it isn't that hard for UEC to grow sales and EBITDA significantly. So I don't think my projections are over-optimistic.