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Telecommunications iiNet: risky but rewarding, maybe
Telecommunications iiNet: risky but rewarding, maybe | iiNet: risky but rewarding, maybe |
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| by Stuart Corner | |
| Saturday, 15 July 2006 | |
  
According to MicroEQUITIES' analysts, "iiNet has the largest deployed ADSL2 network in Australia with over 210 exchanges built. MicroEQUITIES believes that whilst iiNet stock has an inherently high risk profile, the potential reward should iiNet turn around its financial and operational underperformance is also quite considerable. MicroEQUITIES says it values the strategic deal between iiNet and Powertel as a positive development, because it will permit increased monetisation of iiNet's expensive but rapid ADSL 2 network and allow iiNet to leverage its infrastructure, albeit by opening its network to competitors. Furthermore, MicroEQUITIES believes that the upcoming ULL pricing decision is, on the balance of probabilities, likely to have a more favourable outcome for Telstra's competitors than for the incumbent operator. According to the firm's micro|report micro cap-focussed investment newsletter "there is a significant chance that iiNet's stock may at some stage become involved in merger & acquisition activity as Amcom and PowerTel's holdings represent investments with different agendas and either of these entities could access the necessary financial resources needed to put a deal together." iiNet will hold a five percent weighting in MicroEQUITIES' micro|report recommended portfolio. Other companies currently covered by MicroEQUITIES are Hostworks, Integrated Research, KLM Group, M2 TELECOMMUNICATIONS and Becker Entertainment. |
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