The management of this telco network company have shelled out just short of 20 million on assets worth over 400 million, amazing. Please read the following report.

Many thanks to Brian for this excelent e- mail on the company.

If it's good enough for Warren Buffett ........
Published: 07:41 Fri 29 Aug 2003
By Joanne Wallen, Associate Editor,/b>


Alternative telecoms player GX Networks is defying all odds - it has just raised a further 12 million, made another acquisition and should be profitable 'very soon' thanks to the vice chairman's cunning plan - it's also in a sector that two US billionaire investors have bought into.

Peter Dubens is vice chairman of GX and also of ukbetting, and his strategy for both is the same. He is taking advantage of what he views as a unique moment in history to create two businesses that both become the beneficiaries of the massive over investment made by young companies in the past four years.

GX (GXN) today announced that it has acquired Firstnet Services, a similar telecoms business to itself, from Minorplanet (MPS) for 4.3 million. At the same time it has raised 12 million through an institutional placing of 261.9 million shares at 4.75p.

GX Networks was a private company that Dubens bought last year, before reversing it into AIM-listed Zipcom and changing the name to GX. The company bought two businesses that were virtually bankrupt and two more since that were 'not distressed' including today's acquisition of Firstnet Services from Minorplanet.

Dubens told Citywire that in total, these businesses have had investment of a massive 400 million, fuelled by the investment money being thrown around during the dotcom bubble. The opportunity comes from acquiring the expensive technology and infrastructure that this spending frenzy paid for, while chopping out all the excess costs and creating at a fraction of the original cost a viable business.

GX is a provider of telecoms and Internet hosting services to small and medium businesses. Another valuable legacy of the halcyon days is the long-term rental type agreement it enjoys with network owner Fibernet (FIB). GX is probably the sole survivor with a 25-year (now 23 years left to run) Indefensible Right of Use (IRU) agreement with Fibernet. This agreement effectively gives GX ownership of part of the network for the duration of the IRU. GX's previous owner paid some 11 million up front for the privilege, but it was an agreement that caused strange accounting anomalies among the carriers, and Fibernet for one stopped issuing IRU's.

Dubens says the IRU gives GX far lower capital costs than any other telco, since it is not responsible for maintaining the network for the next 23 years.

The idea therefore is to get as many customers as possible using the network, hence today's acquisition and the previous purchases of Transigent last October and Telenor Business Holdings' XTML and Compulink Information eXchange in July, each of which has been primarily for the customer base. The company now has some 20,000 customers and 44 million worth of billings.

Firstnet also adds some wireless and broadband technology and significantly increases the company's hosting capacity.

There is clearly significant duplication in putting these similar businesses together – call centres, management teams and the like, and Dubens and his team have already demonstrated at Ukbetting that they can be ruthless in stripping away unnecessary costs.

So after the devastation of the past few years, is there really still a viable business for an alternative telecoms operator? 'More so than ever,' reckons Dubens. He cites ukbetting's own situation as an extensive user of telecoms, spending some 700,000 a year on communications. The online betting site has leased lines, satellite links, virtual private networks and is absolutely dependent on having a service that can handle millions of bets coming through at the same time for a major sporting event. Dubens reckons small and medium businesses need a reliable alternative to the incumbents like BT, that can offer a more personalised service to their customers.

But he would say that. A more compelling reason to believe that there will be some winners in the sector is the recent investment by two well known billionaire investors, Warren Buffett and Carl Icahn.

Buffett, the traditionally tech-averse 'Sage of Omaha' emerged with a $20 million (12.7 million) stake in US telco Level 3 in May, while Icahn, a 67-year-old billionaire, took XO Communications out of bankruptcy in January and has since launched a $700 million hostile offer for bankrupt telecom provider Global Crossing.

Shortly after announcing his offer for Global Crossing, Icahn is reported to have said: 'This is like the railroads in the 1880's.'

Dubens himself is no slouch. As well as GX and Ukbetting he is a co-founder of Avocet Capital Management, a European technology hedge fund management business.

Two UK shrewd investors to have spotted the opportunity are A-rated Roger Whiteoak, with 4 million shares in the Framlington UK Smaller Companies Acc fund and also 45 million shares or 4.59% in the Throgmorton Trust (THRA). AAA-rated Patrick Evershed holds 0.51% for the New Star Select Opportunities fund.

GX's shares are currently up 0.125p at 5.625p, valuing the business at 56.6 million. If the company can break into profit any time soon, and the hunches of Dubens, Buffet and Icahn are right, now is the time to buy. Just remember this is still a risky business, and Buffett and Icahn at least can afford to lose a few shirts.ENDS.

Indeed risky but if all things go to plan just how big will the reward be.

GF

Good buying this morning after the slight ( Dow Jones and Footsie ) panic of recent days.This is fast becoming a great company and the recent placing with quality institutions is a testament to the directors confidence in the future which has been transformed by the Pipex deal.

Be prepared for the share placement next Tuesday. I expect the MMs willhold down the price a little until that has gone through.

Thought I'd put it on the thread.

ticked up a bit since announcement.

Result of Extraordinary General Meeting


GX Networks plc, the telecoms network operator and provider of business
broadband solutions, is pleased to announce that the ordinary and special
resolutions of the Company relating to the Placing and Acquisition of PIPEX
Internet Limited ('PIPEX'), as set out in the circular dated 3 October 2003 (the
'Circular'), were duly passed by Shareholders at the Extraordinary General
Meeting held today at 10.00am.


It is anticipated that completion of the Placing and Acquisition of PIPEX is to
take place shortly when a further announcement will be issued.


Definitions used in the Circular apply in this announcement unless the context
otherwise requires.

- Ends -

No news yet on therights isue ? !

anyone in the no ?

What rights issue ???
Remember they have just placed shares to raise the money required for the Pipex aquisition.

See news today timed 9.52am - no longer GXN but PXC AND 443 million shares already sold so my concern that share price might suffer... already happened, "worst is over" hopefully

I was under the impression that to fund the purchase of pipex was via a rights issue .....obviously not then

the 443m was the rights issue.

Well correct me if i'm wrong. I thought a rights issue was when shareholders on the register at a set date were intitled to by the stock in order to maintain ther current ....lets say % status in the company. If the shares were freebees...they would have been a " Script Issue "

Well i'm a shareholder and have had nothing infofroming me off my right to buy at any disclosed rate i.e 3 for 10 issue.

Mitch :-)

Rights issue was for institutions only.

Long term Buy this one chaps dont forget. If your not an investor its better to nip down to the local bookies or casino if your looking for a quick return.

Just trying to point out the value of being patient.

good luck.

gf.

Well aware of that Goldfinger ...(why i hold mine on my Long-term portfolio with IMIweb. I have a good long term feeling on this stock (as i do for the bulk of companies within the telecom/ service provide sector of the market).

However I do think it's quite unfair that only the Institutions were offered the rights. I defineatly would have taken the rights issue up and with my current investment in Pipex would been a grand sized cheque for the money men at Pipex.

..... anyone know anything about a company called "INNOBOX" ?

DOC the next one to move upwards substantially.

Mitch1967 I agree with you there but lets be honest the private investor always gets shafted and always will until we get somekind of decent regulatory body, lets face it the FSA are a powerless organisation when it comes to the private punter, high time it was changed but I cant see it.

cheers GF.

Hi goldfinger,

As GX Networks - GXN is now Pipex Communications - PXC and bearing in mind little woman's comment on too many threads posted on one topic which I'm inclined to agree with her, would you be able to edit the topic heading and epic to reflect this change? Hopefully this would keep one news thread in one place.

rgrds,

Legins

Legins, no problem if you can advise how you do this . I have been messing about earlier just trying to do this very thing. If I press the cancel button, which I darent I think the whole thread would be lost.

I can set up a new thread with a new header and on the old one on the last post re- direct posters to the new one. Any ideas????.

cheers GF, it certainly needs to be changed over to Pipex., any thoughts on a new heading title????, go on you mentioned it.

Goldfinger,

I tried to see if I could make similar changes on a thread I originated, but can only edit the text of the first message. It may be and idea for you to just edit the text of your first message with a comment pointing out a new thread for Pipex. Your first message on this thread, could perhaps be copied over for the first message of the new thread. For a new heading title, how about :-

PIPEX accelerates nee GXN's Break Into Profit!

Other than that I wonder if one of the AM Moderators could do it for you as I suspect that once GXN disappears from AM data streams we will no longer be able to look up & read archived threads/news for searches on this epic.

Cheers, Legins

Legins mate, I have been in touch with Ian the moderator or whatever and asked him to change the title as per little womans thread. It hasnt been done so if it aint been done by lunch time on wednesday I will go through to the big chief.

Regards GF.