STOCK IDEAS
Globalization, once a mantra, is now a curse for companies tied to overseas economies. For wireless service providers, however, a presence in worldwide markets is still a strong selling point. Unlike their industrial or commodity-based counterparts, wireless ventures are not subject to seasonal trends or the effects of severe weather. More important, cellular is often and rightly viewed as a cheap alternative to wireline service in countries with an underdeveloped or overtaxed telecommunications infrastructure.
Among the higher-rated wireless outfits, San Francisco-based AirTouch Communications is favored precisely because of its global presence. AirTouch, with over 32 million customers around the globe, is now the world's largest wireless communications provider. And it plans to add 3 million new cellular and PCS customers by the end of the year. "It has been a great stock for a year and a half in terms of growth and performance," says Colette Fleming, a telecom analyst at Morgan Stanley Dean Witter. "And it's been fueled by the company's international growth."
Also worth paying attention to is Nextel Communications, whose strength lies in an established domestic customer base and a growing presence in Latin America and Asia. Nextel is still in a nascent phase of international expansion, with over 2 million domestic and 300,000 global subscribers. Analysts anticipate it will have a positive cash flow before next year. "If the market snaps back, Nextel is going to have a turbocharged rate of return," predicts a well-known market player.
Wireless firms are seeing dramatic growth even in regions around the globe that have been pummeled by recent economic events. "Demand is so high and the demand curves for wireless are so incredibly steep," explains Doug Colandrea, a telecom credit analyst at Morgan Stanley Dean Witter. "Wireless companies don't feel the impact from negative economic news that you might expect."
AirTouch: www.airtouch.com/. Nextel: www.nextel.com/.
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