brokers tip

BUY UNWIRED GROUP LIMITED (ASX Code: UNW)

Worth a punt at these levels, we see little downside from here. Exciting growth prospects in rapidly expanding industry.



Entry Criteria
SAFE RANGE Between $0.30 and $0.34.
BUY We believe that prices around $0.30 will be available to patient investors over the next couple of weeks.

Fundamental Analysis
Unwired Group Limited operates in the telecommunications industry in Australia. UNW intends to establish a fixed wireless access network in major cities and regional centers across Australia for the delivery of broadband and voice services.
Unwired's growth will come from increasing its customer base to a level above the breakeven point of 70,000. During the 1st half of 2005, the company signed up 13,465 new customers. Unwired's distribution base has been increased to include retailers such as Harvey Norman, Domain, Dick Smith, Tandy and selected Apple stores. A wholesale agreement with AAPT was signed in 2004 and further agreements are expected during 2005.

With broadband internet growing at 121% for the year to 31st March 05, Unwired has been receiving plenty of positive exposure lately due to business milestones and announcements. The growth in broadband and wireless broadband is enormous, and many people are starting to listen. Recently, Unwired won the Australian Carrier of the Year Award, Australia's most prestigious telecommunications award. They were recognised for bringing affordable broadband access to Australian customers as well as other niche products. The service, which is between dialup and broadband, offers wireless constant access to the internet at speeds faster than traditional dialup. We see tremendous opportunity for growth in this market as Unwired is the only company currently with this product.

On this note however, Unwired are negotiating with Optus to rollout wireless broadband internet access across Australia. The agreement would involve the national rollout of wireless broadband using Unwired's network and product and Optus's infrastructure. This would have an enormous impact for Unwired's growth and has the potential to really launch the company forward. Given the recent announcements and positive exposure, ASR believes Unwired is a 'Speculative Buy', with a long term focus.



Technical Analysis
This one tried hard today to push above Gann Fan line resistance and was beaten back after the positive Optus news to just on the line. The large upper shadow shows that there is still some selling around, but the huge volume spike indicates that much of the selling overhang may have been eliminated today. New investors are getting in around current levels (evidenced by the accumulation volume pattern late April/early May), whilst stale investors are increasingly reducing positions. When the stale investors are all done, positive news flow could see this one move nicely higher and test previous resistance around $0.50. Stochastics look encouraging.
We don't see any major hurry here, and note that the Optus deal is far from finalised. Patience should see buyers rewarded with prices around or below $0.33. If it runs away, don't chase it - we are confident it will come back.

Regards