Subscriber Values: August 2002

ISP-Planet Staff [August 29, 2002]

Among the regular ISPs whose values we track, EarthLink (NASDAQ: ELNK) fared the best, rising from a market cap of $828 million to $959 million, an increase of just over 15 percent. The overall ISP subscriber value rose slightly from $465 to $493, and the value without America Online (NYSE: AOL) rose from $139 to $147.

Subscriber numbers are from ISP-Planet's list of Top U.S. ISPs and from company reports. Market capitalization data is as of market close, Monday, August 26, 2002, reported on the Wall Street Research Network.

OmniSky, a mobile wireless ISP, was in Chapter 11 when it was acquired by EarthLink in January, 2002. At its peak, OmniSky was valued at $1.6 billion. Forbes estimates that in 2001, EarthLink paid about $150 per subscriber for 36 other ISPs with a total subscriber count of 304,000, a total of $46 million. If Forbes' estimates are correct, the average size of the acquired ISPs would be 8,500 subscribers. This data suggests that EarthLink pays the same price for dialup as it does mobile wireless subscribers.

Go America's (Nasdaq: GOAM) stock continues to fall. We expect to add Motient (OTCBB: MNCP) back to the list of mobile wireless ISPs when it next reports subscriber numbers.

RCN (Nasdaq: RCNC) is adding cable subscribers and slowly decreasing its dialup which should add to profits. Its stock fell as the company agressively wrote off stranded assets.

Monroe, La.-based Century Tel (NYSE: CTL) and its subsidiaries operated 1.8 million telephone access lines and had 536,400 long distance customers as of June 30, 2002. DSL appears to be insignificant for the company, and the number of Century Tel DSL subscribers was not disclosed. This company, the second largest on our list, sold its wireless operations to Alltel (which is described next, and is the largest on our list). After the sale, analysts released positive reports on the company's debt and the stock soared to a market cap of $4.087 billion. When we last reported, the company had a market cap of $3.250 billion.

Little Rock, Ark.-based Alltel Corp. (NYSE: AT) provides communications and information services, as well as telecom products and telephone directories. The company counts 6,843,000 wireless customers, 2,611,900 access lines, and 1,363,800 long distance customers for a total of 10,818,700 subscribers. Alltel purchased the wireless operations of Century Tel (above) and its market cap rose by over $1 billion, but this company was already the largest CLEC on our list, so the rise was less significant than rises at smaller companies.

Reston, Va.-based Talk America Holdings, Inc., more familiarly known as Talk.com (Nasdaq: TALK), serves 244,000 retail phone subscribers, both residential and small business. The company leases all facilities from ILECs. Although Talk.com does have debt, most of it is not due until 2007 or later.

General Communications (CGI) counts WorldCom as its largest customer and shareholder, which has not helped the company's share price. Aside from WorldCom woes, however, the company seems fine. All told, GCI (Nasdaq: GNCMA) serves 90,000 long distance subscribers, 95,800 access lines, 31,300 cable Internet customers, and 135,100 cable TV subscribers for a total of 352,200 subscribers.

Covad Communications Group (OTC BB: COVD) is cutting costs and now serves about 357,000 subscribers, down 2,000 from the previous quarter. The market appears to appreciate the cost cutting, and Covad's stock went up.

Alaska Communications Systems Group (The ACS Group) is diversified, facilities-based telecommunications provider in Alaska. The stock fell on negative reports that expressed concerns about the company's debt load. The ACS Group (Nasdaq: ALSK) currently operates 330,000 access lines, connects 80,000 cellular and 65,000 long distance customers, as well as 47,000 Internet users including 9,850 DSL subscribers. The company's market cap fell sharply last month from $131 million to $87 million, and fell again this month to $54 million.

Movements in the stock of CLECs seemed, this month, to reflect the market's judgment of the strength of cost cutting and debt reduction efforts. Fiscally conservative comapnies saw their stocks rise, while more profligate corporations received a strong missive from the market about the importance of cutting costs to restore profitability

At last count Charlotte, North Carolina-based US LEC (Nasdaq:CLEC) provided services to 7,500 enterprise customers comprising 208,188 voice and 40,147 data channels, as well as 30,131 ISP clients. US LEC did not disclose subscriber numbers in detail this month and is temporarily not on the list.

When they last reported detailed numbers, FASTNET (Nasdaq:FSST) provided services to 2,164 enterprise customers, 26,276 SOHO customers, and 7,014 webhosting customers. The company closed several acquisitions recently and has not updated its numbers, so we have temporarily taken the company off our list.

—End