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GNCMA - General Communications


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In terms of revenue growth, GNMCA grew TTM revenues by 4% per year.  This is at the higher end of the cable cos (CVC 1%, TWC 2.6% and CHTR 5%) and above all the telcos.  They actually increased customers by adding 500 modems in Q4.  Given the growth profile and profitability think GNCMA is closer to cable co vs. a telco.  Another comp is SHEN and CNSL which increased revenue by 4% and has wireless, cable and cable offerings.  SHEN is trading for 7.3x EBITDA (7.0x for CNSL) based upon TTM EBITDA.  If that multiple is applied to GNCMA, it is a 50 cent dollar.

 

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  • 2 weeks later...

There was some odd price action going on last week, someone slammed the close big time on the 10th (something like turned a negative ten cent day into a positive eleven on over 60K shares). I figured it was just the company doing a buyback, but maybe someone was establishing a position..  ???

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Does anybody have a view (*cough *cough packer) on Google Fiber

 

<<In February 2014, Google announced it had "invited cities in nine metro areas around the U.S.—34 cities altogether—to work with us to explore what it would take to bring them Google Fiber.">>

 

What is the risk of google eventually entering Anchorage? They have some pretty aggressive prices.

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As of today it looks like Google Fiber will be in cities in the lower 48.  See Google fiber website.  The cities appear to have to meet a checklist which includes access to the existing pole or conduit infrastructure.  I am not sure if this infrastructure is privately or publicly owned.  If privately owned I think you would have a hard time convincing owner to share with Google fibre.  If publicly owned probably not too much of an issue.

 

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As of today it looks like Google Fiber will be in cities in the lower 48.  See Google fiber website.  The cities appear to have to meet a checklist which includes access to the existing pole or conduit infrastructure.  I am not sure if this infrastructure is privately or publicly owned.  If privately owned I think you would have a hard time convincing owner to share with Google fibre.  If publicly owned probably not too much of an issue.

 

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I believe the model is that they partner with the city to install the fiber, and then act as the manager of it.

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Yes, it seems that GNCMA is taking the strategy that the best defence is a good offence. It makes the most sense too in my opinion. I feel Google's Fiber project is also just a way to force the big telco's into upgrading their network speeds and won't be their focus long term.

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I don't worry about Google fiber anyway, but it's very painful to see that optical fiber is widely used in many asian countries while in the U.S. it's still below 10%

 

I guess the main obstacle is the last mile issue and the barrier is those regulation trouble you need to overcome before you can bring your fibers to many homes ?

 

Don't worry guys, Google has a long history of starting random side projects, failing, forgetting about it and moving on to the next thing. I doubt google fiber will be a threat.

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You have to look at the enviroment here. First they  need to actually install cables into alaska. And then they need to install the infrastructure in a pretty harsh enviroment.

 

If you just look how much cash was available to return to shareholders in the last 10-15 years, that should tell you something about costs a company potentially has to enter the alaska market. Most of their cash from operations went into investing in the infrastructure in the past decade and a half.

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I'll be honest, I do worry about it. GCI has their high speed internet priced at $175 per month while Google Fibre charges just $70 (no data limit either)? Google is a bit like Amazon, they are pretty happy to make nothing on a project for many many years.

You have to look at the enviroment here. First they  need to actually install cables into alaska. And then they need to install the infrastructure in a pretty harsh enviroment.

 

If you just look how much cash was available to return to shareholders in the last 10-15 years, that should tell you something about costs a company potentially has to enter the alaska market. Most of their cash from operations went into investing in the infrastructure in the past decade and a half.

And a very small population base to spread out the costs.

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I'll be honest, I do worry about it. GCI has their high speed internet priced at $175 per month while Google Fibre charges just $70 (no data limit either)? Google is a bit like Amazon, they are pretty happy to make nothing on a project for many many years.

 

Google is making money unlike amazon. They may not do it directly. They could easily collect data from fibre users and sell advertisements.

 

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I'll be honest, I do worry about it. GCI has their high speed internet priced at $175 per month while Google Fibre charges just $70 (no data limit either)? Google is a bit like Amazon, they are pretty happy to make nothing on a project for many many years.

 

Google is making money unlike amazon. They may not do it directly. They could easily collect data from fibre users and sell advertisements.

 

Though there isn't any precedent for it, I could see Google buying GCI if the fiber is up to snuff and they were looking to build their cable empire. I'm sure part of the motivation for building out fiber is from fear of being at the mercy of the cable providers. Having a large foothold in the industry gives them bargaining power.

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