Cherry picking the smaller telecos

Based on revenues, AAP is Australia's third largest telco. With over 180,000 business and government fixed wire customers, an aggressive expansion strategy is now in place targeting residential business. It's also a Vodafone SP (service provider) making it Australia's third largest independent mobile SP through its ownership of Cellular One. AAP's share price has performed strongly since listing, particularly since British Telecom takeover rumours started. Intriguingly the share price, even in the face of its failure to meet prospectus forecasts, has been propped up by these rumours. While there's still plenty of cash left in the kitty AAPT is looking for acquisitions but these may require additional funds to be raised. Even though AAP has an exciting future with break-even expected during 1999, at current prices the stock looks more than fully priced. ACCUMULATE on weakness.