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

some fairly large sells late in the day. 500000 at a time.

Danny thnks for update..

The Great thing is Price did not move down on volume ratio, as they were delayed trades. Profits have to be taken as always...

Sell price remains in tact at 5.75 - 6p to buy. (I bought at 6p...)

I actually foresee GX NETWORKS to really hit off once Public Joe (ok Private Investors...) reads up and does some research into the GXN...hence the time to buy is now...at under the 10p level then it can officially be called a potential Ten bagger...lol.

The risks are always there...as they were with AIT when I bought at 13p...Did my research when no one else was interested also with Harrier at 10p now look at them...AIT Group is 77p hitting 94p just a few weeks back and Harrier Group hit 31p ...there are I can mention...

...but sometimes as an investor you have to 'speculate to accumulate'...a classic phrase but with essence...if u are confident and beleive in ur research methodology..

GoldFinger may well earn his 'Goldfinger' if we are correct...

when I've been right the rewards are very generous...DYOR as always b4 buying...

Have a hot date tonite :-) so wish me luck...

Jules99

Yep

In the last 30 mins of close 3.5 million shares went through as sales (iii).

Not sure whats happening, MM's also increased the spread (6.5p ask price). I got in today at just under 6 today beating the yellow strip price.

For the chartists out there it looks as though the last couple of days suggest a doji - suggesting that in the short term the price is likely to drop a little, hope fully it will break in the other direction.

We shall see.....

So it was Snr-Gallery who bought the 200,000...to buy that mansion block in Nottinghill...

Im trying to buy the one bed studio in Peckham...lol..

a bit patience always pays off I've found.

Peeps keep posting if I miss something from other BB's etc..

Jules99.

Mansion? Notting Hill? Behave! I'm struggling to pay my phone bill!

Spreads a lot lower today, get in under 5.88.

u and me ...lol...

Shares Mag have been tipping this one for a while. I bought in at 4.9 at the end of July.

Have they...will have to check it out when I get a second today...

Hi jules. Stick with this one, it may not fly at the beginning but this is sheer raw basic fact, the management of this company have bought around 420 million pounds worth of telco network for just under 20 million. Throw in Fibrenets network aswell for nothing over the next 23 years and also over 8 milion of cash which they have stated they are going to use towards further acquisitions, and also with the last one they are very close to being cash flow positive, and you have the recipe for probably one of the biggest share buying and holding opportunities of a life time. And thats no kidding, as I firmly beleive with the management behind this one it is going to be massive, but you will have to be very patient, its a long termer but one that should be well wel worth waiting for.
gf.

GF- I intend to...

- It's weird we all saw the sells 2 days ago...but the price instead of going backwards is going up this am...!

5.75 - 6.25 up-2.13%

Investors taking interest again.

Excellent buying going on....!

1 largy Buy of 1.3m shares...

Wasn't me...

HOON.

Hi Goldfinger,

I like yourself have good feeling about this stock and purchased stock yesterday and also interested to add to my holding when have available funds.


I'm kinda new to all off this.


If you have time to look .....................what do you think off Innobox (INO) ?

Mitch

Pulled this off tye shares section:

GX Networks goes shopping
by: Polly Fergusson

Telecoms network provider GX Networks (AIM: GXN) is on the acquisition trail, in spite of having made three 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 against the current share price of 5.6p.

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 SME 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.

GX cant 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,' says analyst Graeme Kemp at house broker Collins Stewart.

'By the end of next year it could well be time for GX to put up a for sale sign, adds Kemp.

He is forecasting sales of 48 million this year against 8 million last year, and earnings before interest, tax, depreciation and amortisation (EBITDA) of 5.5 million.

The real reason investors should be looking at this company is its strong balance sheet. With 9.5 million of net cash, low capital expenditure and a 3.7 million net free cashflow forecast for this year, the banks are going to start getting interested soon, explains Kemp.

Dubens is very pleased with house broker Collins Stewart, and is not looking to change broker, in spite of the current row between Collins Stewart and former analyst James Middleweek, which has adversely affected some house stock's share prices.

GX's interim results are expected in mid-September, and the shares are worth buying ahead of results.

SO WHY ALL THE BIG SELLS???

DANNYCARSWELL-do u hold GX Network???

YEAH BOUGHT IN A COUPLE OF DAYS AGO AT 6P. ON THE BACK OF SOME PRETTY AVERAGE AND RUSHED REASEARCH. NOT IDEAL I KNOW.

U did well...I bought into Motion Media a few back after doing reearch...and sold out at around 7p mark...Thats a big Ouch...MMd went upto when it caught on 17p!

I should be on holiday today...

I'm holding mine DannyC I dont wish to make same mistake twice in amonth...

If you cant leave the money tied up or too nervous or not done enough research, then ur just playing gambling...then simply sell and move on and come when ur ready and done enough of your OWN resrreach, Ive done that many a times...no big deal in that.

ta..
Jules99.

I've been watching the high volume of trading in GXN and don't really understand why the price doesn't seem to move up or down. Can anyone explain?

Thanks

CHEERS JULES FOR THE WAKE UP CALL. AT THIS MOMENT IN MY LIFE I HAVE SOME SPARE CASH HANGING ABOUT AND INSTEAD OF THROWING FAIRLY WILD PARTIES AND GENERALLY MISBEHAVING I THOUGHT I WOULD TRY AND DO SOMETHING CONSTRUCTIVE. SO I SUBSCRIBED TO SHARES MAG SPOKE TO ONE OR TWO FRIENDS WHO TRADE REGULARLY AND HERE I AM. THROWING MONEY LEFT RIGHT AND CENTRE INTO THE UNKNOWN HOPING FOR SOME BIG RETURNS...............CERTAINLY NOT THE WAY TO GO ABOUT "INVESTING" BUT I AM HAVING FUN AND LEARNING ALONG THE WAY. I AM DEVELOPING A STRONG INTERST IN THE MARKET AND AM INTRIGUED BY THE WAY IN WHICH IT WORKS. THANKS AGAIN JULES FOR THE ENLIGHTENMENT.