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

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.

Lets not start bickering again or start up a different thread dedicated to that.

Anyway, back to business, good to see PXC on the up again!

Yep agree, lets just talk about making money, pls.

I agree these personal attacks from a minority on SC need to be just ignored.

cheers GF.

The shares should be up tomorrow i bought 250000 shares at 16.15 and some of my friends bought shares today too

10p very soon.....

News in from netimperative
--------------------------

UkBetting has launched a broadband service designed to give subscribers high-speed access to exclusive sports content and betting bonuses in what is being billed as the first bundled broadband service for sports and betting fans.


In addition to broadband access through ISP Pipex, the offer includes customised sports news from SportingLife.com, audio sports commentaries from TeamTalk, archived sports video coverage, casino and poker bonuses and racing tips.

---------------------------
Ukbetting have had good press lately, so the deal with Pipex will benefit both companies hopefully.

Subject: Shares Mag Article

The company is mentioned twice in this week's issue. The results are reported on p51 with a speculative buy recommendation as it has cash in the bank and a solid customer base. Its market capital is 38.12 as opposed to last year's 6.43.

The following article is by Michelle Baltazar at the bottom of pp18 and 19.

Investors searching for the next big thing in the alternative telecoms industry need look no further than alternative minnow GX Networks. Formerly Zipcom, the shares have nearly doubled since January to the current 4p following the reverse acquisition of GX Networks late last year, hence the name change. But what could send the share price soaring is an imminent acquisition or acquisitions that, like the GX purchase, will transform the groups cashflow and earnings profile. This has been made possible thanks to a successful fund-raising of ?5 million from institutions 4 months ago.

Graeme Kemp, technology analyst at house broker Collins Stewart, said buy in January at 2.25p, placing a now achieved target price of 4p. Kemp says: 'the shares are fair value based on the business as it is now. But I remain a buyer because of acquisitions that could be fairly dramatic in terms of the group's prospects.'

Founding CE Graham Purvis says: 'The merger with GX acts as a springboard to what will be a fairly aggressive roll-up strategy.' The management has looked at more than 100 acquisition targets and has whittled that down to the final ten companies or so.

On the surface GXN does not look any more special than its peers. But dig a bit deeper and the differences start to emerge. The company is debt-free and does not compete in the residential market, where BT is a clear market leader and price maker. But more importantly, thanks to serendipity and savvy decision making, 2 acquisitions were made at bargain basement prices that bumped the group's customer base from a shaky 500 to over 7,000.

Thanks to the recent GX purchase, Kemp expects sales this year to more than treble to ?29 million (2002: ?8.5m) and pre-tax loss to more than halve to ?5m (2002: ?11m). Next year the company should break-even and enjoy another 31% turnover rise to ?38 million.

So what were these life-changing acquisitions? In 2001 the group bought HighwayOne from an administrator for ?900,000. At the time the original owners had already ploughed in ?35m to build an internet network, the benefits of which - without the related cost - went to GX.

Then in October last year, Zipcom repeated the same coup when it bought GX Networks for ?10 million. At the time some ?100m had already been spent to develop its small and medium enterprise lease line data business.

Crucially, GX had already paid for a 25-year lease with Fibernet (FIB). In other words, the next 22 years or so will be rent-free. While lease costs continue to fall, the immediate saving from it this year is around ?600,000.

GX is using its strong cash position to buy assets on the cheap and build the business from it. While it is a consolidator now, the icing on the cake is that the company could become a juicy takeover target itself in a couple of years. Collin's Kemp suggests a bid from one of the bigger telecom players in the US is possible in two years.

Shares mag have recommended GXN at least 3 times since early July. The latest recommendation is that the shares are worth buying ahead of the results in mid Sept.

Under the heading 'GX Networks goes shopping'

Telecoms network provider GX Network s is on the acquisition trail, in spite of having made 3 acquisitions in a month. The company, which has just bought Leeds-based Firstnet Services for ?4.3 million, has created a ?12 million war chest for more deals after an institutional placing at a discounted price of 4.75p.

"We are looking for more acquisitions this year", says executive vice chairman Peter Dubens. "The residual funds we have raised will allow us to move quickly on any targets." Dubens is looking to continue to expand geographically throughout the UK.

Firstnet provides hosting, leased lines and connectivity services to a range of small-and-medium-enterprise (SME) customers. The deal makes GX's customer base more than 20,000, up from just 600 in December 2001.

But while Dubens has ambitious expansion plans others are not so sure. Analyst Graeme Kemp at house broker Collins Stewart says "GX can't go on making deals at this sort of rate. I reckon that other players are waking up to the potential in this market and it is only a matter of time before Thus and Kingston wade in." He added "By the end of next year it could well be time for GX to put up a for sale sign."

He is forecasting sales of ?48 million this year against ?8 million last year, and earnings before EBITDA of ?5.5million. "The real reason investors should be looking at this company is its strong balance sheet. With ?9.5million of net cash, low capital expenditure and a ?3.7 million net free cashflow forecast for this year, the banks are going to get interested soon," explains Kemp.

Big trades going through should push the share prices up tomorrow :
2500000
4500000
2000000

7406543 shares bought
3350482 shares sold

Hi RAS, yup good stuff lets keep the fingers crossed first. Sees you later freind.

cheers gf.

oh god, that's all we need, a visit from rasool

58 million buys, most very late.
What's going to happen Thursday?

So what happend today, are we in for a good day tomorrow I wonder.
This stock is full of potential

Yes...they do look like buys...could be someone has got wind of some good news - or someone taking a position for the future... either way looks good

FF

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Received the above as an e-mail this evening.........makes interesting reading in my opinion.

Great stuff RAS, please keep it coming.

cheers GF.