Thursday, July 06, 2006

Interesting Call of The Day - ICO Global Comm (NASDAQ:ICOHA), Motient (OTC BB:MNCP)

Jefferies' Romeo Reyes comments on news that Clearwire received a $900 mm financing from Intel and Motorola including $600 mm from Intel Capital.

Mr. Reyes believes the investment was for a non-controlling interest in Clearwire at a valuation north of $0.30 per MHz-POP. The company did not disclose all of the details, but he expects additional details will be forthcoming in the next few weeks.

Reyes thinks that this valuation validates spectrum valuations and represents a premium to the current valuations of ICO Global Comm (NASDAQ:ICOHA) and Motient (OTC BB:MNCP). MNCP currently trades at just $0.15 per MHz-POP while ICOHA trades at just $0.18 per MHz-POP.

Assuming a $0.35 per MHz-POP valuation for the spectrum, the implied share price for MNCP and ICOHA would be north of $25 and $7, respectively. Given the nationwide nature of the spectrum of MNCP and ICO NA, the analyst believes the spectrum should trade closer to $0.50 per MHz-POP.

Investment in Clearwire will act as a catalyst for an additional investment in the ATC/wireless data space, most likely from DBS operators. DTV has stated its intent to announce a wireless broadband strategy before year-end. Reyes believes that strategic investors, such as DTV, may want to cut a deal before the AWS auction as valuations are likely to increase post the auction.
Given the valuable nature of this nationwide spectrum, Mr. Reyes finds the current valuations compelling and would advise investors to take advantage of current weakness.

Notablecalls: Do I know anything about these two co's? No. Does the call sound interesting? Yes! Worth a closer look!


opinionater2001 said...

Dont think minor players are going to benefit from "Auction 66" except from possibly acquisition. Major players will win the new band widths at great expense. Those Co's and the foodchain they feed are who will benefit.

BTW, great blog!!

notablecalls said...

You're most likely right.

Thanks! Updating this blog is a kind of a hobby of mine. It also helps me to summon up my...mostly hectic and random thoughts about the mkt/stocks.

Good to know there are people that find it useful or interesting :)