rest in peace, page-14

re: atc...another penny dreadful Laurra,

Facts, please.

POINT 1-- Twelve months old.

Not quite.

The ATC business has been around since early 2000 when on 8 February 2000, it was incorporated as a Hong Kong based wholesale carrier. ATC (formerly NuGold) acquired a 60% interest in Advantel in March 2000. At the time, NuGold advised the ASX that:

"Advantel is a new par-Asian telecommunications carrier based in Hong Kong, which is initially establishing a wholesale switching operation. The first stage of this
operation involves relationships established by Advantel with telecommunications caniers and service providers in the USA, Hong Kong and the PRC".

The Release went on to say:
"With respect to the financial projections KPMG concluded that: "... in our opinion, Advantel’s financial pro-jections are reasonable ... the minimum volumes for termination are achievable and the projected revenues costs are feasible and the arrangements for infrastructure and equipment appear appropriate ... there were some areas of concern regarding the existing arrangements for working capital but these could be readily overcome ...”

The ASX release then said:
"... will manage client relationships and collect revenues from the international carriers . . . As a carrier's carrier Advantel anticipatcs having relatively few customers
and limited marketing requirements ..."The full report contains commercially confidential infomation and therefore cannot be released in full".

By 14 July 2000, NuGold was predicting big things for Advantel, forecasting at the time "gross operational revenue .... to be US$48.6 million. As a result, earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to be approximately US$13.5 million for the same period".

By 23 March 2001, NuGold was confirming that it would move to 100% of Advantel, and spin off the Pelican assets. This was after having earlier advised the ASX that it would not be doing this (see, ASX Release of 6 March 2001).

Far from being around for 12 months, Advantel has been around for ~3 years, and under the effective control of ATC since March 2000.


POINT 2-- Massive growth and revenue increasing

I do concede the point that MoM (month on month) revenue for ATC is increasing, albeit off a low base. Massive growth, however, remains to be seen, unless you are arguing that $1m turning into $2.0m makes for 100% growth (ie: massive growth off a low base).


POINT 3-- FNT (sic)aquisicion

This acquisition was first announced to the market back in early July, virtually as a complete deal.


POINT 4-- Very depressed Telco market making capital
raising very difficult.

This is nothing new, and has been in abundant evidence for quite some time. This, however, has not stopped ATC from making very forward statements about its capital raising programme (ie: Griffin, etc).

The reality with the telco market (which I know only too well) is that:
1)
CAPEX spending is constrained;
2)
there have been some very big capital raisings out there (even in 2002), for the likes of Marconi ($4B), Alcatel, France Telecom ($4B), Ericsson ($7B), Nortel, Lucent, Sprint, Orange, KPN ($5B) and for BT. The China Telecom capital raising was recently scaled back due to the sheer enormity of the raising, but even that raised several billions.

To this equation, you can add in the market raisings that have been pursued by Hutchison Whampoa in respect of their global 3G network build (including $5B in respect of the UK, $4B for Italy, and several billion elsewhere, including $600m in Australia).

Yes, I concede that the capital raising market out there is tough at the moment. But, primarily it is tougher on poorly developed, or executed Business Plans, with limited asset /shareholder back-up arrangements, than what it is for well developed, executed, or financed (in the BP sense) business opportunities.

In addition, I did not think that we were talking substantial amounts here - $20 -40m at the most, which in September, ATC was quite bullish about.

As for the Telstra sell-off, that has a lot more to do with political execution, than it has with the toughness of the market. The Government wants $5.40 or greater. The markets, however, would snap it up @$4.50 or less.


POINT 5-- New Board members Mittens and Biddles

Yes.

POINT 6-- Very low bad debt

That remains to be seen. ATC still have not demonstrated the collectability of their accounts, yet.


POINT 7-- Very high quality (sic)clientelle

Yes. But so too did TMN. Then again, TLO also claimed Deutsche Telecom, France Telecom, BT and Singapore Telecom amongst their clientele.


POINT 8-- Solid future projections

This remains to be seen, whether based on the highly optimistic impressions of 14 July 2000, or the more recent projections of July and August this year. Or, then again, the even more robust projections of early November (following the Chinese price increase).