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Four analysts and top management from twenty-two sector firms examine the communications services sector in this special 98-page Comunications Services issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info470.htm.

TWST: What’s it going to take to spark investor interest in this space in 2002?

Mr. Grover:The first thing is that Wall Street changed the rules. Over the past two years, throughout this carnage, Wall Street has changed the rules and shut down the capital markets and said, “Show me the money — turn profitable.” So while there have been a lot of headlines about companies going bankrupt or folding or withdrawing or shutting down or whatever, what people are not seeing is that, underneath all this, there is a cast of companies that has successfully addressed the incumbents, whether it’s RBOCs or PTTs, and their businesses are turning profitable — they are turning cash flow positive, which I think people will focus on first, and are turning EBITDA positive.

TWST: What’s it going to take to spark investor interest in this space in 2002?

Mr. Grover: The first thing is that Wall Street changed the rules. Over the past two years, throughout this carnage, Wall Street has changed the rules and shut down the capital markets and said, “Show me the money — turn profitable.” So while there have been a lot of headlines about companies going bankrupt or folding or withdrawing or shutting down or whatever, what people are not seeing is that, underneath all this, there is a cast of companies that has successfully addressed the incumbents, whether it’s RBOCs or PTTs, and their businesses are turning profitable — they are turning cash flow positive, which I think people will focus on first, and are turning EBITDA positive. There’s a group in the public world of emerging carriers, whether they’re local or data or international or Internet providers, that are all turning EBITDA-positive in the same window of about 12 to 18 months, and you can start checking them off as we speak. Network Plus (Nasdaq:NPLS) is a regional CLEC that just turned EBITDA-positive in 3Q01. Allegiance Telecom (Nasdaq:ALGX) is a bigger CLEC — they’ll turn EBITDA-positive in the second half of 2002. EQUANT (NYSE:ENT), which is a global data company that dates back to 1949, just acquired Global One, and they’ll be EBITDA positive in the fourth quarter of this year. The list goes on and on. So there are actually companies that have made it, and I think that’s going to be the first step to getting investors interested.

TWST: And consumers have become much smarter about working out the best deals. You’ve told us in the past that it’s appropriate to have a basket approach to these stocks. Which stocks would you be including in a basket of emerging communications stocks today?

Mr. Grover: I’d start with WorldCom (Nasdaq:WCOM). WorldCom is fully funded. I think there’s a basket of smaller companies, some of which your readers probably are not aware of. One of them is EQUANT. They’re a global data services company, as I think I said earlier, founded in 1949. They were born out of the airline industry needing a data network, so they built a network over 50 years that spans 220 countries. They have just acquired Global One from France Telecom in a very significant series of transactions that now gives the company 3.1 billion in revenues. A company with positive EBITDA, they have 1 billion in cash, they have 220 country networks, 3,700 of the world’s largest corporations, and 80% plus of the Global 5000 as customers. And they’re trading at an enterprise value of about 1.3-1.4 times revenue, which is relatively cheap.

This special issue includes:

1) Communications Services & Equipment - In an in-depth (4,500 words) Analyst Interview, Rick Franklin & Gary Mobley, both Senior Industry Analysts at Bank of America Capital Management, examine the outlook for the sector and share specific stock recommendations.

2) Emerging Communications - In an in-depth (4,100 words) Analyst Interview, Vik Grover, Managing Director at Kaufman Bros., L.P., examines the outlook for the sector and shares specific stock recommendations.

3) CLEC & Incumbents - In an in-depth (4,300 words) Analyst Interview, Thomas Morabito, First Vice President/Senior Telecom Analyst at McDonald Investments, Inc., examines the outlook for the sector and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of twenty-two sector firms examine the outlook for their firm and the sector.