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  1. 87 Posts.

    Tell please if this is good news, ? dividen in the future UEC want that for sure.....

    21/11/2002 09:09:13
    Open Briefing. Uecomm. CEO's Q3 02 Update


    HOMEX - Melbourne




    Uecomm Limited recently forecast total revenue from operations of $41
    million to $44 million for the year ending December 2002. You won $51
    million in sales contracts during the first nine months of the year
    and recently announced two year contracts worth a total of $20
    million with the New South Wales Department of Education and Training
    (DET). What's the time frame for recognising revenue from the
    contracts won this year?


    The average contract term of the services we've sold this year,
    including the DET contracts, is approximately 36 months. Provisioning
    for services typically takes two to three months, but can take up to
    six months for large contracts. Apart from the DET contracts, the
    majority of the contracts signed to date have been provisioned and
    all should be provisioned by the end of the year.

    The contracts signed in 2002 are already having a substantial impact
    on our revenue. At the start of the year, our monthly revenue was
    approximately $2 million, excluding billings from the Lucent
    contract, which was terminated in May. We expect monthly revenue to
    be between $3 million and $3.4 million by the end of the year, and
    the DET contract will add an average of $0.8 million per month to
    that when fully provisioned. New sales made from now on will of
    course add additional revenue to the monthly total.


    Uecomm reported capex of $14.6 million for the nine months to
    September. Given the volume of contracts recently won and that a
    number are large in scale, do you anticipate an increase in capex
    requirements as you connect the new customers?


    We're forecasting capex of approximately $20 million for 2002. We do
    expect to see an increase in 2003, on the back of some of the large
    contracts recently signed. However, the net funding requirement will
    be reduced by the sizeable up-front payments we receive for these


    Cost of services plus operating expenses worked out to $2.8 million
    per month in the third quarter, compared with an average of $2.7
    million per month during the first six months of the year. Is the
    $2.8 million per month indicative of the level of costs going forward
    and to what extent are these costs fixed?

    CFO Peter Dawson

    Our cost base is largely fixed. There's little variable component in
    our cost of services, so that won't increase significantly for an
    increase in revenue. We do expect to see a marginal increase in
    staffing costs. This is where we're starting to see some pressure
    now, with our technical and product staff and our operations group
    close to capacity. We estimate the $2.8 million cost base will
    increase by about 10 percent over the next 12 months as the company
    continues to grow its customer base.


    You reported net operating cash flow of $4.3 million in the September
    quarter. This compares with $2.5 million in the second quarter and
    negative $4.5 million in the first quarter. What is the outlook for
    operating cash flow for the full year and can you maintain the upward


    It's difficult to provide a forecast for the full year due to the
    impact of yet-to-be-provisioned services on operating cash flows.
    However, we do expect to maintain the upward trend, based on monthly
    revenue increasing substantially and the cost of services and
    operating expenses rising only marginally.


    As of the end of September, you'd drawn down a total of $30.2 million
    from the $80 million loan facility provided by your 66-percent owner
    United Energy. Areyou still on track to end the year with a
    cumulative draw-down of $35 million to $40 million from the facility?


    Yes. We drew down approximately $10 million during the first nine
    months, so clearly we're on target to be within that range by the end
    of the year.


    There have been reports in the press that other broadband network
    providers are having difficulty signing customers in the current
    lacklustre telecommunications environment. How is Uecomm able to
    attract customers when competitors can't? Is this a pricing issue?


    We believe there are a couple of reasons for our success so far in
    2002. Firstly, we're very focussed on selling broadband data services
    to the corporate, government and wholesale telecommunications carrier
    segments. We're not trying to cover any other market segments, such
    as residential or SME. We're selling services to the key segments
    that require high-speed data services.

    Secondly, we have a large network located in the CBD and metropolitan
    areas of major capital cities, and there are very few players who
    have a network where we do. With significant coverage and reach,
    we're able to provide attractive services, both on functionality and


    Thank you Peter and Peter.

    For previous Open Briefings with Uecomm, visit

    For more information about Uecomm, visit

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