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 over 8% already this morning :-)

Thanks Goldfinger

Yup Guys, the dam wall as broken at last and we should see some action now.

Gone in for wharehouse load this morning after my shed load yesterday.

May even go in for a hanger load this afternoon.

GF

ps, just car clinics is another one to get in before 15th when results are out.

Plenty still left in it please check it out and DYOR.

MOTION MEDIA FANS BETTER STEP ASIDE...THERE'S A NEW KID IN TOWN AND HIS NAME IS


GXN...



Good luck to all...

Still a buy at 6.75??? Not sure whether it's too late to pile in here?
What are your thoughts for over the next few of weeks - short term target? When are the results due out? Thanks you guys!

Results mid september.................

Cheers - Sell NMS and buy GXN at 6.75?? Any thoughts?

And a nice spread for a share with great potential!....:)
In 1st thing this morning...
Good Luck to all holding

JUST BOUGHT MORE...

MM'S realized huge demand on way soon....extended settlemnt was offered at 7.25p..!

:-)

Bought more late Friday afternoon and glad I did.

Yet another tipping the stock. From todays Sunday Business.


The acquisitive telecoms network operator GX Networks (GXN) is accelerating its role as an industry consolidatorwith another deal to buy capacity. Leeds based Firstnet Services, aquired for 4.3m, is the fifth network business bought since flotation three years ago - all at arguably knock-down prices- taking its customer base from 600 in December 2001 to more than 20,000 today.
Firstnet Services provides hosting, leased lines and connectivity services to small business customers. In the year to end August 2002, turnover was 7.4m and earnings before interest, tax and depreciation were 1.1m.
The deal was accompanied by a 12m share placing at 4.75p, taking the group's cash position to more than 15m - a huge war chest to fund acquisitions. In July, GX, formrly known as Zipcom, bought two telecoms businesses with sales of 11m, for 1m in shares.
The company now independantly owns and operates one of the most extensive national networks with data-centres in London, Manchester and Leeds.
GX said the takeovers are the beginning of "a structured programme to grow significantly over the next year". Now the challenge is to report profits from the expanding empire. If that is achieved, the shares could offer significant upside.
GX should benefit by being the consolidator of companies that have spent massive amounts on networks, funded when equity capital was cheap. The asset base - Firstnet, for example, has net assets valued at 4m - will limit the amount the group needs to spend on capital investment. And judging by the recent share placing by Collins Stewart, chairman and chief executive Grahame Purvis is having no trouble tapping the City for more cash when he requires.
Rationalisation, following the acquisition of Transigent last year was said to have achieved an annualised 7m of benefits. With the addition of Firstnet's sales, annualised group turnover should be more than 35m and operating profitability should come in the current year, though it is too soon to be making forecasts.
Further acquisitions look likely. All this good news has not been lost on the market which has marked the shares up - but they are still a long way below their previous highs, and GX Networks is a different animal with a more plausible story. Its prospects are probably better than at any time during its short history. Buy.

From Andrew Griffiths - The Business

gf.

Phenominal interest in this stock this morning, over 4 mil traded so far, 100% buys. Price to buy remains steady at .07

Goldfinger....or anyone
help me out here
at risk of sounding like some sort of retard........
How can so much buying take place in a single stock and the price not move an inch?

Baffled from north london!

It may sound a bit obvious but the reason for the lack of movement could be a large sell in the pipeline that will turn up later on today - it could be one of the institutions selling some to make some quick money. On the other hand it could be a large buy order is being filled at the 7 pence mark - who knows!
One thing is for sure - this company still has a huge upside in the short term and even more so in the medium term

FF

Mexican
thanks

There is an overhang, CS the house broker is getting rid of it's placement stock. Once they allow the other mm's to play then this stock goes north.

What does CS and mm's mean? I'm a beginner. Thanks.

CS, Collins Stewart. MM, market maker.

kael
thanks, makes more sense now, bloody cs, will be the death of me !!

kael
any idea of the amount cs has to sell?

cheers

we dont have to be clever to see demand and appetite for GXN is out there...FUTURE LOOKING GOOD...