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

Up 7.4% now. Hopefully it'll sustain the rise until close.

Yeah, we need positive finish to the day.......

My super sonic sodar radar detects some movement....AT LAST!

How far will it go jules99, if yr super sonic radar is that good can you advise, lol :-), very quiet on these boards today....

Lets hope they reach 21p on some fantastic news tmor am...Im I dreamin?

California,,,

up up and away

Very solid "classic" bounce from the resistance level and still in a strong uptrend - should be plenty more to come!

Thanks overgrowth may even purchase some more.....

AS MY FREIND WOULD SAY..

NO ACTION NO REACTION...!

Hopefully some action soon...

The PIPEX Com now looks to make 10MILLION QUID PROFIT A YR AND A TURNOVER OF 50 Million...so this is a great stock no doubt and damn cheap, as a holder I have no worries on this one...

Me to. Come on England.

match on sunday, getting the crates in this morning.

cheers GF, love my rugby.

what you really want to watch gf is the match on saturday. come on you aussies!!!

From today's Times:
Pipex Communications, previously GX Networks, added p at 7p as Collins Stewart, house broker, cleared a seller of an overhanging line of four million shares at 6p.

GF.

Goldfinger,

Do you think we can now see the PXC share price showing a continuing rising trend back on track again with this overhang of stock out the way?

4.5million shares traded today as Unknown (only 3 trades) anyone know whether these were buy or sell orders?

I am in, been waiting for that overhang to go. (PS: For GF off-topic:GF our pal at UQ doing his nut at thought of SC buying!! What price Britannia thread reappearing at SC!!). Good news for Pipex anyway. Expect move up to continue next week.

Yet another big trade just gone in, this time 3.2million shares as Unknown!

Anyone know where all these big trades are coming from?

Am very confident this will hit 10p but is it going to be next week or week after (My short term target 10P & Longer term about 30P )

Ha Hawick, wondered where this posting was, just found you mate.

SCs going down the drain and Joes letting it go that way. Its fastly becoming another adfvn. Im sticking to this board the people here are a lot nicer than a silly minority on the SC board but they dont do anything about them. Three yellows and off on here.

See you later.

cheers GF.

ps, keep the above post for you know who stabbing back.

Goldfinger

If the people here are "a lot nicer" than those on ShareCrazy, why are you still posting there even though you say above that you are not???

It seems to me that when you post on ShareCrazy (aka Slater) you do it to cause trouble. Is this by design, because you are bored, or just because you cannot handle a different view to your own?

Either way, it's very sad to see.