Subscriber Values: September 2002

ISP-Planet Staff [September 19, 2002]

The national Internet service providers whose values we track stayed mostly level. Notable exceptions include EarthLink (Nasdaq: ELNK), whose value dropped because major shareholder Sprint announced plans to sell about $30 million of stock, about 3 percent of the company.

After being upgraded by First Albany on August 7, 2002, United Online (Nasdaq: UNTD) stock rose. Then the company was downgraded on August 21, 2002 and the stock fell. This ridiculous turn of events caused fluctuations in the stock that seem to have nothing at all to do with the business itself.

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, Tuesday, September 17, 2002, as 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 continued to fall as the company shifted to the Nasdaq small cap market because its stock remained under $1.

As it has exited bankruptcy and reported subscriber numbers, we added Motient (OTCBB: MNCPE) back to the list of mobile wireless ISPs. In addition to its 90,082 wireless Internet subscribers, the company has 35,445 field services subscribers, 91,803 transportation customers, 29,826 telemetry customers, and 543 in a category labeled "maritime and other."

RCN (Nasdaq: RCNC) is selling its only cable franchise, but was criticized for plans to use the proceeds to expand instead of pay down debt. Standard & Poor's said, "Proceeds from the sale will mainly be used to expand RCN's cable overbuild business. Therefore, the transaction does not address Standard & Poor's ongoing concerns about RCN's substantial leverage, prospect of weakening liquidity, and business risks due to competition from digital subscriber line and incumbent cable modem service providers."

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 purchased the Missouri ILEC business of Verizon (NYSE: VZ), acquiring 354,000 access lines, which have been added to the company's subscriber numbers. The company acquired Verizon's Alabama ILEC business on July 1, 2002, adding 300,000 access lines, which are also added to Century Tel's subscriber numbers this month.

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. Two companies initiated coverage on Alltel, with one positive report and one neutral report, and the company's stock rose.

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 stock value. 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. Covad stock began to rise the day before the company announced a deal with AOL. Since then, it has been very volatile, but appears to trade around the price reached on September 5, 2002, the day the deal was announced.

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 from $131 million to $54 million over several months, and is now bouncing back.

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 the company 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.

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