Forum Archive Index - April 2004

["david.gibson" <david.gibson@k.co.nz>]

In establishing a value for MUL.ASX, I suggest the following questions/points need to be taken into account:

 

1)  The technical characteristics of satellite communication are that they offer reasonably high downlink bandwidth at a very high latency.  Modern web applications have modest bandwidth requirements but demand very low latency.  (Applications like video conferencing and VoIP do not need high bandwidth - the 764M requirement in the report is rubbish - they demand constantly available bandwidth (isochronous) and very low latency.

 

2)  The world has a glut of raw bandwidth.  Since the Teleco boom of 1995 and the Dot Com bubble of 1999-2000 - bandwidth infrastructure investment has vastly outstripped demand.

 

3)  Coverage to third world nations or arid deserts is only really of interest to the US Military.  You don't make money with coverage - you make it by having high bandwidth, low latency, WELL SUPPORTED, infrastructure in large metro areas.

 

I have some grave concerns over the revenue forecasts produced in the recently circulated report.  I hope there are other reasons, not disclosed in the report, that support the revenue projections.  My main worry is that the infrastructure being touted is being valued on the basis of bandwidth=$$ - this is not the case.  Look at the difficulties the Southern Cross Cable system is having in selling its high bandwidth, LOW Latency service connected into the US POP!!

 

MUL.ASX have not released enough technolgy architecture detail to be convincing that thy have something special.  If they had an optical fibre story - I'd buy it, at a multiple to NTA of about 2.5 (not 7 as is current).

 

Caution!

 

Disclosure:  does not hold MUL

 

/dbg