Ann: Response to speculation in the media , page-28

Mike, thanks for circulating business spectator link.

All, I'm interested in BGL and would appreciate your thoughts on its growth outlook, especially primary drivers over the medium term.

I find it difficult to identify strong drivers other than to place my faith with management. I do get some comfort having been very impressed with Jason at the Microequities conference however I would be much more assured if the future was less opaque.

At the Microequities presentation Jason presented the following split of March 2011 earnings:

March 2011 monthly revenue
$1.4m from Fixed Wireless Division
$0.5m Student Accommodation Division

After the presentation Jason confirmed underlying growth run rate for Fixed Wireless division was about ~10% pa, which is okay but significant growth must therefore come from student accommodation and other services.

Jason confirmed that BGL currently has approx 25% of the student accommodation market, leaving some fairly significant upside for growth, and there will no doubt be further growth as the total market grows when foreign student numbers increase when/if f/x comes back.

This however still leaves a niche play with significant technology risk.

The other areas of growth mentioned by management are in my mind very blue sky and I place very little value on.

These include:

- inorganic: stated acquisitions of rural wireless networks (small fry)

- organic: other customer verticals such as mining (also targeted by Telstra http://www.businessspectator.com.au/bs.nsf/Article/No-NBN-for-new-housing-developments-J82VS?OpenDocument&src=hp7 ) or NBN backhaul (short-term opportunity until NBN rolled out)

Am I missing something?


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Personal views only