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Big Dollars From Winstar Dialing

Inside Wall Street


Winstar Communications, once a tiny speck in the long-distance business, has suddenly become a potential major player in the nation's rapidly growing telecommunications industry. Its acquisition in February of the right to buy 80% of Avant-Garde Communications "has radically changed the company," says investment adviser Tom Fendrich of Fendrich Associates Institutional Research.

Avant-Garde owns microwave-radio licenses to deliver voice, data, and video services over 200 megahertz of exclusive bandwidth capacity in 30 of the nation's top markets, including Atlanta, Dallas, Los Angeles, New York, and Washington, says Fendrich. He figures these licenses, which could be used by Winstar for competitive-access-provider (CAP) phone services in metropolitan areas, are worth $25 a share in Winstar stock based on the price of comparable licenses that Nynex recently purchased. CAP lets customers bypass the local telephone company in connecting to long-distance service. Winstar is currently a low-cost reseller of long-distance services to businesses and homes in the U.S.

Fendrich figures that the stock, now trading at 41/2, is significantly undervalued, with a potential to rise to 15 in the next two years. He expects Winstar will start making money in the year ending Feb. 28, 1995, with a profit of 10 cents a share. In 1996, earnings should to rise to 65 cents, he figures.

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