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TWST: Could we start with an outline sketch of the universe of telco stocks that you're following?

Mr. McClure: I'll just give you a bit of background. Old Mutual Securities is the firm I work for. It's actually a very new firm, the product of a recent merger between Greg Middleton and Albert E. Sharp Securities. We are now under the banner of Old Mutual.

TWST: Shall we go on to your next stock on the buy list?

Mr. McClure: Fibernet represents a very good buying opportunity. Fibernet is a high-speed data transmission service provider, based in the UK. They have developed a national network across the UK, and their customers are other telecoms carriers, Internet service providers, and large blue chip corporate clients that have high-speed data transmission requirements, typically large companies in the financial, media and health sectors. These are high value customers that generate good margins. Fibernet's strategy is quite interesting. The focus is on data. They're not a switched voice seller or ISP, so they're not competing with their customers, which differentiates them from some of the other companies that provide bandwidth. They're not competitors, so they're seen as neutral. A lot of companies are very comfortable co-locating their equipment in Fibernet's facilities for that reason. The company is now expanding. They've raised GBP40 million in the last month to expand into Europe. They're going to replicate their UK strategy in Germany and France, so they're going to build national networks in those two countries. This is different from some of the other operators that have moved into Europe with cross-border services. Fibernet has figured out — and I think rightly so — that national network markets are underserved. There's plenty of bandwidth being built between major European cities, but there aren't many companies building dense national networks that connect cities and towns within these countries. They're doing that because there's a market there. They've succeeded in doing that in the UK, and they're going to do it again in Germany and in France. The other thing is that they operate a low-cost network. Fibernet has decided that, given the falling cost of leasing bandwidth, they'll lease their backbone network. The company concentrates resources on connecting their blue chip customers directly using fibre. It's about capturing and keeping customers. These are high-value blue chip customers who, at the end of the day, are willing to invest in a service that connects them and gives them highly reliable services. Unlike a lot of companies — or a lot of competitors who are actually only starting to do this now — they're specialists in Local Area Network and Wide Area Network integration. They're able to offer large business a service that creates what looks like a LAN over a national geography. Fibernet began as a LAN business, and they've extended into a Wide Area Network operator. I think that Fibernet's LAN heritage is very valuable when it comes to winning blue chip customers, and I think, at the end of the day, it's going to be valuable when it comes to winning wholesale customers as well.