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Net2000: The Right Year for this IPO

The Telecommunications Act of 1996 provided for significant deregulation of the telecommunications industry, including the local telecommunications and long distance industries. In a nutshell, this allowed for companies such as Net2000 to prosper.

Net2000 is a rapidly growing provider of state-of-the-art broadband telecommunications services. The company is an alternative to traditional telephone companies, providing services to businesses located throughout

the mid-Atlantic and northeastern regions of the United States. These solutions include an integrated package of high-speed data services, Internet services, local and long distance services.

Net2000 began operating as a competitive telecommunications provider in July 1998. Prior to that, they were a sales agent for Bell Atlantic. Since their introduction in July 1998 they have successfully acquired more than 1,100 new business customers representing approximately 78,000 access lines.

As of December 31, 1999 their 13 Phase I markets represented a region with more than 9 million business access lines. This region equates to approximately 1/5th of the total United States business lines, according to TeleCon, an independent telecommunications research firm. In Phase III of their deployment, they plan to extend their network to include markets encompassing approximately twenty of the business access lines in the United States.

There are a couple of key areas that separate Net2000 from its big brother competition. Net2000 offers all customers connected to their networks low-cost dedicated access rates irrespective of calling volume. They also provide billing for all of their services on a single invoice (wow, an innovative concept in the telecom biz!).

Total revenues for Net2000 grew from $9.4 million in 1998 to $27.6 million in 1999. The two main segments of the telecommunications industry, voice and data services, continue to drive growth. More important is Net2000's strong business and marketing plan, which will expand its market share in the near future.

Net2000's business strategy is simple, but effective: Offer more for less cost to their customers. Expect the IPO do to quite well next week.

The price range on this IPO is $13-15 and the lead underwriter is Goldman, Sachs & Co. The proposed ticker symbol is NTKK.