http://www.theage.com.au/business/nbn-rollout-may-make-bigairs-da...

http://www.theage.com.au/business/nbn-rollout-may-make-bigairs-day-20110701-1gtwb.html

decent article from theage.com.au

NBN rollout may make BigAir's day
Richard Hemming
July 1, 2011 - 11:49AM

The media focus on the Telstra's sales of its network to NBN for $11 billion that was announced this week has seemingly been relentless, and understandably so.

But investors looking to take advantage of the changing telecommunications landscape would do well to consider BigAir, one of the smaller players in the telco world.

At 31 cents, its shares have climbed about 50 per cent in the past couple of months. BigAir (ASX code BGL) has a market cap of about $45 million and is a provider of high-speed broadband via a wireless network throughout Australia.
Advertisement: Story continues below

The share price rise is partially due to the 20 per cent profit upgrade announced in early May, and it could also be sparked by speculation of a takeover by one of its competitors. But it could also be that investors are cottoning on to the opportunities that could lie ahead.

Being a wireless provider, BigAir is in the luxurious position of being one of the few companies that can actually compete with the NBN, because of the cherry-picking legislation that stipulates companies that own fibre networks can't compete with the NBN in regional Australia.

BigAir has spent about $10 million building its network in the past seven or so years. In the main it services small- to medium-sized businesses in the main cities. Its network often acts as a back-up for many businesses, whose operations cannot afford to be offline.

But in the telco world, perspective is needed. Compare BigAir's capital expenditure with the $3.6 billion Telstra spent in fiscal 2010 alone (FY09 it was $4.8 billion) ? and this isn't including its investments.

Why wouldn't a gorilla like Telstra just spend $10 million building a wireless network on its own?

Linwar Securities' analyst Owen Humphries says it would be better value for a gorilla to just buy BigAir because of the technical difficulties. He then waxes lyrical about the virtues and ubiquitous nature of the internet ?cloud?.

According to Humphries' forecasts, Big Air is trading at a discount of between 10 and 20 per cent to competitors such as Vocus (VOC), iiNet (IIN), TPG (TPN) and Macquarie Telecom (MAQ).

BigAir's talismanic chief Jason Ashton says that what is important right now for investors is the cash flow the company is generating, which at the operating level and after capital expenditure is about $5 million a year.

?There is a big disconnect there,? he says, without irony.

BigAir's rising share price means that more people are dialling in to this disconnect.

Read more: http://www.theage.com.au/business/nbn-rollout-may-make-bigairs-day-20110701-1gtwb.html#ixzz1QqjJuRrW