more on unwired and skg

TELECOM COMPANY MAKES COST SAVING DEAL WITH AUSTAR
Sydney - Monday - July 11: (RWE Aust Business News)
**************************************************
OVERVIEW
********
Telecommunications stocks are the most difficult companies to
assess due to the huge amounts of capital required and the restrictions
covering markets.
Few can break through and become majors so they are speculative
investments.
You might apply these observations to Unwired Australia Ltd (UNW)
which has so far spent about $200 million in rolling out, but has a
market cap of $90 million.
But strength and safety can often be achieved by combining forces
with others in similar areas of activity.
This is the very move that Unwired announced last week.
It has entered into an agreement with Allco Finance for a $15.7
million secured loan to finance the Austar spectrum swap deal also
announced on Thursday.
Unwired is already fully funded to take its business through to
positive cash flow in Sydney.
This medium-term loan enables Unwired to enter into the spectrum
swap arrangements with Austar, which will give Unwired the important
2.3GHz and 3.5GHz licences in most of the major metropolitan centres in
Australia, without any impact on the Sydney business.
Unwired has previously announced that it is in negotiations with
a number of major parties regarding funding arrangements to complete its
national roll-out.
The WiMAX-enabled 2.3GHz and 3.5GHz spectrum licences will allow
Unwired to focus on the introduction of wireless broadband into the
capital cities and major metropolitan centres, including Sydney,
Newcastle, Melbourne, Geelong, Canberra, Brisbane, Adelaide and Perth.
Unwired's coverage area represents about two thirds of
Australia's population.
Chairman Peter Spence believes the whole country will get
wireless broadband much more quickly.
He says it will significantly reduce the company's capital
commitments.
Part of the deal is the payment of $15 million as part of the
spectrum swap.
But Unwired has emphasised that its payment to Austar would not
eat into its current cash reserve, which is predicted to keep the company
liquid until its Sydney operations break even.
SHARE PRICE MOVEMENTS
*********************
Shares of Unwired yesterday closed 0.5c lower at 36.5c. Rolling
high for the year has been $1.14 and low 28c. The company has 244.5
million shares on issue with a market cap of $90.48 million.
Mr Spence said, "This funding gives us the flexibility to own the
spectrum we need in the areas of most interest to us in our build out.
"Instead of spending $50 million to acquire the 2.3GHz spectrum
nationally, with the spectrum swap we are able to concentrate on the
centres of population to build the scale of business we want for only
$15 million, thereby decreasing our future funding needs for roll-out in
other metropolitan markets.
"It also removes the current $3 million a year 2.3GHz spectrum
lease cost we are incurring," Mr Spence points out.
The loan is repayable at any time at Unwired's discretion without
penalty.
The company chose a debt funding facility that it believed was an
attractive option at this stage and was in the best interests of
Unwired's shareholders.
BACKGROUND
**********
Unwired is an Australian-owned, ASX-listed wireless broadband
carrier.
It services residential, small office/home office and small to
medium enterprise markets in the greater Sydney region.
At the end of May the company had more then 25,000 customers in
Sydney alone, just nine months after it launched its commercial service
on August 19, 2004.
Unwired was formed on August 11, 2000 through the incorporation
of Unwired Australia Pty Ltd, and initial equity capital raising
undertake of $128.8 million.
Those funds were used to purchase spectrum licences and fund the
initial start-up and planning costs for Unwired's proposed fixed wireless
access (FWA) network.
In November 2003, Unwired secured commitments for a further $100
million new equity through an institutional offer at 90c per share.
Unwired's shareholders and board announced their agreement to a
takeover offer from publicly listed company Breathe Group Ltd.
Breathe lodged a prospectus with the Australian Securities and
Investment Commission (ASIC) in November 2003 for a retail offer of a
further $5 million, also at 90c per share.
The retail offer closed fully subscribed on December 10, 2003.
The purchase of the shares in Unwired was approved by the shareholders of
Breathe at their EGM two days later.
The EGM also approved a change of company name to Unwired Group
Ltd, the resignation of the existing directors of Breathe, and the
appointment of four new directors who were existing directors of Unwired.
Unwired intends to become the second local loop
telecommunications service provider in Australia, delivering services to
a geographical area covering at least 70 per cent of Australia's
households and 75 per cent of businesses.
If Unwired achieves that objective it may be the only national
alternative to Telstra as a local loop provider.
It intends to provide its service through a FWA network which it
expects will facilitate the delivery of a bundle of broadband and voice
services in most major urban and regional centres across Australia.
Unwired holds spectrum licences which covers approximately 95 per
cent of the Australian population.
The spectrum was purchased by a subsidiary of Unwired, in part
from the Federal Government in 2000 and in part from a subsidiary of
Austar in 2001. The spectrum is in the 3.4 to 3.5GHz frequency band
designated by the International Telecommunications Union for the
provision of FWA services.
Unwired has selected Navini Networks Inc., a US private company
based in Texas, as its primary initial FWA network equipment supplier.
Unwired's Sydney network currently consists of 70 base stations
with plans to put two more into operation in the first half of 2005.
Unwired has leased space on existing sites to establish its
network of base stations.
In Sydney Unwired is now sold through more than 110 retail
outlets including Harvey Norman, Dick Smith Electronics, Tandy, Dick
Smith Powerhouse, Domayne, The Co-op Book Stores and select Apple
outlets.