APTT, SoftBank, ECB, Uber, Grab, WeWork and irrational competition.

Didn't AK say he is going to be less active blogging?

Yes, I am currently holidaying in Neverwinter.

See:
Winter Festival and Hell Pit.

The "Hell Pit" event has started but it seems that the first week is pretty easy.

So, it isn't taking up as much time as I thought it might.

Anyway, a reader wrote me a very long comment on APTT.

It is obvious to me that he put in a lot of effort researching APTT's business and prospects.

Of course, he also put in a lot of effort writing the comment.

It is only good manners that I reply.

The reply became a bit too long and I decided to blog about it instead.

Read the reader's comment: HERE.






AK replies:

Hi Verseun,

During "Evening with AK and friends" last year, I explained in greater detail why APTT was possibly a good investment at much lower unit prices after Mr. Market reacted negatively to its huge reduction in DPU.

This was in response to my blog titled:

Gobbling APTT as its unit price plunged.

I believed that APTT's ability to fund further investment in broadband infrastructure using internal resources would see them becoming stronger versus their competition in the broadband space (i.e. telcos).





I explained that the unlimited data plans offered by the telcos in the area were really untenable in the long run compared to what APTT was able to offer.

APTT's broadband infrastructure has much lower OPEX in comparison.

The investment to upgrade would be huge but like I said APTT had the ability to fund it without taking on additional debt with the huge reduction in DPU.

Even now, I could see APTT selling backhaul capacity to the telcos in the future.






However, I also said during "Evening with AK and friends" last year that it depends on how long the competition stays irrational in Taiwan.

In an era of easy money (think SoftBank) and negative interest rates (think ECB), we could see business entities able to and willing to burn cash for extended periods of time (think Uber, Grab, WeWork etc.).

Why invest in money losing Grab or Uber and not in money making ComfortDelgro?

WeWork has become WeWorked.

How do we work these cash burning businesses?






Anyway, in a nutshell, I agree with your conclusion.

However, I have said that investing in APTT is relatively speculative.

It should be a good idea to keep the position small so as not to lose sleep over it.

See:
Sell into the rally and stay invested.






Of course, all of us have different ability and willingness to take on risk.

We are all wired differently and should do what gives us peace of mind.

Peace of mind is surely priceless.





Of course, please remember that AK is mental.

Read:

How much passive income is enough?

and maybe also:


UBER and GRAB why you so like that?