Ann: MNF launches Naked ADSL2 service at CeBIT Au, page-16

re: Ann: MNF launches Naked ADSL2 service at ... Agree with all you say.

Put it this way, the VOIP business is now truly set to grow from here and be recognised as a sector to become invested in.

Some of us here are sitting on shares in various VOIP companies at higher prices than present levels. I would hope for everyones sakes that all VOIP companies get a lift from MNF figures coming up and if we are lucky good ENG figures too. Can only be good for the VOIP sector as a whole.

As for M&A, certainly a good chance of that too. Would love to see a Seven backed ENG bid on MNF & I expect it too. ENG took 8 years to build its 65000+ and MNF took 3 years. It does take time as we can see.

There is clearly value in aquiring large VSP customer bases. With ENG losses to date they have paid about $30M / 65,000 = $461 per customer. MNF have paid with losses of about $6M / 70,000 = $85 per customer.

ENG customers spend about double what MNF customers do and so are worth more in todays money. So the equation is more like ENG $230 vs MNF $85 or ENG $461 vs MNF $170. Still, it makes a VOIP customer aquisition worth somewhere in the $150-$200 region at present which is about $20-$70 more than what an MNF customer spends PA. ENG customers spend about $300 PA.

Using MNF customer base of 70,000 and customer aquisition figures of $150-$200 gives the MNF customer base a rough value of $10M to $14M or in the range of 19c to 26c per share for 52M shares.

If you run the same numbers in 1 years time, 2 factors come into play, natural organic ARPU growth plus another 10,000 MNF customers adds another $2M+ to the valuation or 23c - 30c per share.

The same argument can be used to value ENG shares, it's customers are arguably worth double what the MNF customers are because of their increased ARPU.

The math would run like this:

ENG Customer Aquisition cost est $300-$350 x say 70,000 = $21M to $24.5M / 635M Shares = 3.3c to 3.8c per share. ENG also has its own VOIP backend if that has any inherent value. Unlikely in a customer aquisition scenario if the buyer was an existing VSP or ISP.

Interested parties in takeovers would be running these numbers at present I would suspect. Of course assets & liabilities need to be factored in as well and present profit/loss of the entity.

I am not an merch banker or qualified to make these estimates and welcome any comment, correction or opinions.


Based on my bush-broker math a re-rating of MNF on the way very soon IMHO.