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

Nothing ventured nothing gained!
IN for long term GF...many thanks for IC post..


Caravaggio

Once again we see buys all morning (one sell since 9.45) and the price just sits there. Another protected order placing shares in the market?

It is up on th day..0.5p...ok so the heavens haven't moved but it still +8.4%

And more to come monday.

gf.

results not far now GF...

next couple of weeks will be interesting for GXN, especially with USB increasing their holding last week to 18.3%, big company news possibly on way, perhaps they are in the know?

good luck to evrybody this week.

Jules99.

Forgive me as I am new to this message board lark, but I have been following these messages for a week or so after purchasing some GX Net myself,

Can anybody give me useful advise about this company?

Host Europe. @ 1.38 pence
Although they had a fiery management reshuffle earlier this year, From the research I have done they seem to be a promising company to invest in. There should be some results out on Thursday, which hopefully will point toward a 1 – 2 M profit , They have an increasing market share with some large clients.
29th August shows a turnover of 466M shares , I think this was the ejected management severing their last ties?
Company report :- http://www.hosteurope.com/HostEurope2002.pdf

I am slowly trying to find my way with stock picking so any comments would be gratefully received.

Kev

Apologies for my ignorance but what are the implications of GXN's announcement today?

JF, nothing much as there are so many shares in issue already. By all accounts results due Friday. We should then get a clearer picture of what is happening.

GF

GF
Thanks but do you mean Friday as in tomorrow the 25th?
I rang GXN and was told they would be posting out interim results to investors on the 30th ie next Tuesday

Will they be announcing the interims publicly, do you know? I haven't seen a notification on the newswire.

Doug

what is price target in short term for this or even in a years time as i'm thinking of investing in them. I've read all the threads on this plus the investors chronicle

thanks everyone

In a years time...a pound would be iceing...A profit would be the ideal goal...how much is everybodys dream...

next week much to be revealed...Hopefully SHARES-magazine and INVESTORS CHRONICLE can live up to something, and be proud that they tipped GXN prior rise and not after...

Good Luck ALL....

Jules99.

So are the results due out tomorrow? I've seen no notification of them on the RNS. As an AIM listed share are they not obliged to give advance notification of results?

I've expanded my holding this morning. They've just come up .25p in the last few minutes, which is nice :-)

DCLINTON/CARAVAGGIO..

so was it on the RSN or RNS...??

lol...

Still haven't bought shares in these yet. I'm waiting on their results.
What do people think share price will go to. Will they rise rapidly or will they decline?
Remember city reacts strangely these days to good/bad news.

Long term buy no matter what results are.

gf.

Interims out today, look good to me. Any expectation as to share price reaction or will this one follow the trend ie fair to good results = price drop?
full report here
http://moneyam.uk-wire.com/cgi-bin/articles/200309300700513227Q.html


Press Release
30 September 2003



GX Networks plc

Results for the six months ended 30 June 2003


GX Networks plc, the telecoms network operator and provider of business broadband solutions, today reports its results for the six months ended 30 June 2003.


Highlights




Revenues up nearly five-fold from 2.3 million to 11.1 million


Gross Margins increase from 15% to 40%


3 major acquisitions post period end


Stronger product set and enlarged customer base


Management and Board strengthened by new Chairman and new CEO


Current annualised billing of 43 million



Commenting on the results, Peter Dubens, Chairman of GX Networks plc, said: Good progress has been made in the six months to 30 June 2003. The Company that evolved from the merger of Zipcom and GX Networks 12 months ago has been totally transformed creating the base for the further three acquisitions made since the period end. We now have a cost efficient business capable of sustained growth in its core markets.


For further information:



GX Networks plc


Peter Dubens, Chairman
Tel: +44 (0) 20 7766 6909


www.gxn.net



Media enquiries:


Bankside

Henry Harrison-Topham / Ariane Vacher
Tel: +44 (0) 20 7444 4140

henry.ht@bankside.com
www.bankside.com

Well, the market seems to like it at the open. Bid is up a quarter point already.

Also, check out DDD. On the move - interims out today.