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Nic a Jon
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just want to share again.....good investment opp

Published October 12, 2005

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NEWS ANALYSIS

Voice reaching beyond

Singapore's horizon

Global Voice, which owns a

fibre optic network covering

major European cities, has

plenty of room to grow,

reports ANGELA TAN

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IT used to be Horizon

Education and Technologies.

But today, Global Voice

Group (GV) has nothing to do

with the defunct dotcom

company. Instead, the

Singapore-listed company now

operates out of Ireland and

generates most of its

revenue from its fibre optic

network in Europe.

Mr Meaney: Global Voice

acquired its fibre optic

assets - costing more than

US$450m - for only US$60m

As if defying investors'

aversion to unlit fibres,

this nascent company -

formed in a reverse takeover

of troubled Horizon in

October 2004 - has been

topping the actives, with

more than 200 million shares

changing hands yesterday.

Fund manager FMR Corp, which

includes Fidelity

International, has bought up

to 5.2 per cent of GV in the

open market. Its share price

has risen from five cents in

June to around 19 cents.

Yesterday, CIMB-GK Research

called a 'buy' on the stock,

with a target price of 28

cents.

'I am very excited about

this stock,' CIMB-GK analyst

Kenneth Ng told BT. 'They

have been selling for only a

short time but have a lot of

head room to grow.

Utilisation rate of their

network is only 5 per cent

now. Any further increase

will just go straight to the

bottom line.

'Looking at their pipelines

and strands of fibres, they

are the largest player in

the cities they operate.

They are already

cashflow-positive and hoping

to turn profitable next

year.'

Dublin-based chief executive

officer Noel Meaney shared

with BT his optimism for the

company, and shed light on

why he believes GV will

succeed where cable network

giants like Global Crossing

or Metromedia Fibre Network

(MFN) failed.

'To put things into

perspective, last year's

revenue was from network

services,' he said. 'This

year we will see the full

year contribution from

network, business continuity

and infrastructure

provision.'

Basically, GV has two

business units - data

services and infrastructure

provision.

Under data services, network

services are delivered on

dedicated fibres rented to

clients, while business

continuity provides clients

with end-to-end data

management solutions.

Clients can use GV's fibre

networks to transfer their

data to storage equipment

that GV owns and operates.

Under infrastructure

provision, GV provides fibre

or duct infrastructure

across cities for partners

to deliver non-competing

services and products.

'Data services is our bread

and butter. Going forward,

business continuity will

become a much greater

contributor than network

services.

'It has a recurring revenue

model and data is a growth

area,' Mr Meaney said.

'This is very important

because we can derive

increasing revenue from the

same customer base, unlike

network which is static

revenue from the same

customer.'

He said that next year GV

sees 50 per cent of the

recurring revenue side

generated by business

continuity.

Growth is expected to be

huge. According to research

firm IDC, corporate spending

on data storage services is

expected to hit US$13

billion in 2008, growing

from just over US$10 billion

in 2005.

GV was formed after a group

of investors led by

Christopher Nightingale, now

GV's vice-chairman, and Mr

Meaney, bought bankrupt

MFN's network in Europe.

This extensive fibre optic

network spanning 14 major

European cities in Ireland,

the UK, the Netherlands and

Germany, was then injected

into Horizon in the reverse

takeover.

Last year, GV made a net

profit of 25.6 million euros

(S$52 million), largely

contributed by negative

goodwill from the reverse

takeover. However, its

Ebitda (earnings before

interest, tax, depreciation

and amortisation) from core

operations was 3.9 million

euros, with Ebitda margins

as high as 50 per cent.

Germany contributed more

than 80 per cent of revenue,

which was 7.6 million euros

from the rental of fibres

and bandwidth sale.

Prospects look bright for

GV. Unlike the dotcom boom

days, when telcos pumped in

huge amounts of money to

build cable networks ahead

of actual demand, GV has

entered the market at the

right time.

Applications that require

high-speed infrastructure to

operate - like GSM networks,

3G networks and

video-on-demand - have taken

off and are rising fast.

More importantly, GV has

acquired this asset cheaply.

The fibre optic networks it

owns cost more than US$450

million to build. GV bought

these networks for only

US$60 million from their

financially distressed

owners.

Thus it already enjoys a

major advantage over its

rivals in an industry that

characteristically has high

fixed costs and low

utilisation rates. It can

lease or sell the fibres to

customers at more

competitive prices or at

higher returns to itself.

As GV's network is

concentrated in big European

cities, the barriers to

entry are also high. There

is a high initial outlay for

the construction of new

fibre optic networks. It

will not make sense for

potential entrants to invest

in new infrastructure when

there are already

under-utilised networks in

place.

While some European telcos

are still licking their

wounds from the dotcom bust,

debt-free GV, with its

robust balance sheet and 6.6

million euros in cash, is

also likely hold out better

than its rivals in any

prolonged periods of poor

business.

What about international

connectivity, investors may

ask? No worries. Lee Theng

Kiat, the chief executive

officer of ST Telemedia, the

new owner of Global

Crossing, sits on GV's

board.

'We have the fibre optics

within the cities. If

clients need international

solutions, we have our

relationship with Global

Crossing to provide the

international connectivity,'

Mr Meaney said.

A caveat though: Standard

Chartered Private Equity has

alleged that GV violated

certain contractual

obligations and is claiming

an estimated HK$40 million,

which could dent GV's bottom

line.

____________________________________________________________________

This transmission has been issued by a member of the UOB Kay Hian Group

for the information of the addressee only and should not be reproduced

and / or distributed to any other

Global Voice +8.8%; CIMB-GK Eyes 28C Target

1047 [Dow Jones] Global Voice (H23.SG) +8.8% at 18.5 cents, again most

active on 86.9 million shares, likely boosted by CIMB-GK's move to initiate

coverage on stock with Outperform, 28 cents target, saying company on verge

of turnaround; notes now at cash-flow breakeven point, expects it to be

profitable by FY06. Though GV likely to turn into cash cow due to its

business of renting private leased lines, selling bandwidth, raises

possibility of exceptional gains from asset sales. Also estimates stock

backed by hidden assets worth as much as 50 cents/share. Initial cap likely

at 19 cents with 17495 offers, vs keen buy at 17.5 cents with 14757

bids.(CAW)

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good for u bro dleecool, i bot in early august....just sold off half last week at 16 cents. but when it broke 17.5 cents i jump in again double..to add on for the lost gap betwwen 16-17.5 cents...now hoping to see 1st 21.5 cents nov 2004 high and 25cents dec 2003 high....

CIMB calling for 28 cents now ;)

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