There is life in incumbent telecoms operators yet, according to a recent executive briefing held by Ovum. The London-based research consultancy says the home fixed-line businesses of many telcos are undervalued by financial analysts.

David Lewin, co-author of Maximising Shareholder Value in the Telco, says: "A common analyst's rule of thumb is to value incumbents' home wire-line businesses at five or six times earnings before interest tax and depreciation (Ebitda). But this fails to take into account the level of competition and regulation faced by the telco.

"Using a multiple of five or six would value British Telecom's wire-line business fairly, but would undervalue that of Telecom Italia or Telefonica of Spain, which face much weaker competition," he says.

Ovum's model takes weaker competition into account and the higher margins a telco can therefore make. It would use a multiple of around 8.5 times Ebitda when valuing an incumbent in a particularly favourable regulatory environment. It believes the home wireline business of most incumbents has an underlying value of 5.9 to 8.7 times Ebitda, depending on market conditions.

The research consultancy is also sceptical about the way in which alternative network operators (altnets) or new entrants are valued.

Mr Lewin says: "When you look at the assumptions made about alternative operators, they just don't stack up. Financial analysts' are significantly overvaluing companies like Colt, Telewest and Kingston Communications relative to their level of capital expenditure and ability to generate cash."

Many analysts are predicting growth rates of about 22 per cent a year for altnets, according to Ovum. Its own growth forecast is 11 per cent for altnets and 2 to 3 per cent a year for incumbents. This would give a growth rate for the telecoms sector as a whole of around 5 per cent a year, assuming that a greater weighting is given to incumbents, which have a larger market share than the alternative operators.

"If analysts valuations for alternative operators were correct, the total telecoms market would be growing at about 11 or 12 per cent a year," says Mr Lewin, "which is simply not the case."

Incumbents' home fixed-line businesses may be in a stronger position than previously thought, but what can they do to unlock more value? Ovum says they must make sure they exploit the move to broadband, or high-speed telecoms links. They must also seek to keep regulation of their broadband business as light as they can.

Also essential, according to Mr Lewin, is that telcos restructure to make their management more responsive and speed up decision making. MW Website: www.ovum.com Prepaid mobile revenues

Prepaid mobile will account for nearly half (46 per cent) of total mobile revenues and 70 per cent of the customer base by 2003, according to a survey by US-based AMS.

The billing software and consultancy firm, which surveyed 45 European mobile operators, expects the numbers of prepaid users to rise this year. But it predicts that average revenue per user will fall from E26 a month last year to E24 a month in 2001.

It believes that higher-speed data services, such as General Packet Radio Service (GPRS), and third-generation mobile will boost average revenue per user to E31 a month by 2003 as users take to value-added services such as games and ticket booking. Its survey, The Next Generation of Prepaid Services, will be available on www.ams.com from Thursday May 17.

Although still looking for internet hotel/web hosting acquisitions, Cable & Wireless showed at Networld+Interop in Las Vegas that it is pressing ahead with its own hosting services.

It announced a range of standard services that can be supplied in as few as five to ten days. Speed is provided by the use of standard applications and hardware and there are usage-based bandwidth billing options. Managed hosting solutions are available immediately in the US and UK and across Europe and Japan in mid-2001.

"Many businesses today are increasingly looking for high performance hosting solutions that can be deployed within days and achieve an immediate return on investment," says Courtney Quinn, senior analyst at The Yankee Group.

Website: www.cw.com Bringing broadband to the building

Europe is starting to adopt the US trend for bringing large broadband pipes into buildings shared by a group of business tenants, known as multi-tenanted units or MTUs.

Strategies for Success in the European MTU Marketplace brings together speakers including John Hahn, managing director of Providence Equity Partners, and Phil Tilley, director of broadband access at Alcatel, to discuss how the European market may differ.

Website: www.totaltele.com/mtu2001 Reverse charge SMS

Reverse charge SMS (short message services) are "set to take off" in the next few months, says Paul Griffiths, marketing director of UK-based Dialogue Communications. Its technology was used to charge customers of the Freeserve internet service for watching pay-per-view pre-fight training sessions featuring boxer Lennox Lewis. Users entered their mobile number on the website and received an authorisation code via SMS text message and a charge to their mobile bill. Dialogue is now talking to a number of other content providers who want to use SMS for micropayments.

Website: www.dialogue.co.uk Telecoms in Africa and Asia

The International Telecommunication Union, a partnership of government, regulators and industry, will be holding its next regional event, Africa 2001, in Johannesburg from November 12-16 2001.

The following regional event will be Asia 2002, to be held in Hong Kong from December 2-7, 2002. The previous ITU Asia-Pacific conference, Asia 2000, was its biggest ever regional event, attracting more than 50,000 participants, 500 exhibitors, 679 VIPs and 810 journalists.

www.itu.int/newsroom.