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Lauder Is Picking Up Lots Of Phones


Inside Wall Street

LAUDER IS PICKING UP LOTS OF PHONES

Cosmetics heir and onetime New York mayor hopeful Ronald Lauder is off and running--this time in a global telecom race. He has formed RSL Communications (RSLCF) to take advantage of the deregulation of domestic and overseas markets. So far so good: From $4.7 million in 1995, sales zoomed to $300 million by 1997. Analysts project revenues of $590 million in 1998. Its stock, down to 17 in early February, has snapped back to 29.

What's going on? Lauder, chairman of Estee Lauder International, and RSL co-founder CEO Itzhak Fisher raised $1 billion in two years to build a telecom giant. Since then, a series of rapid-fire acquisitions has built a global network--including an Internet protocol and phone system. RSL targets small and midsize businesses in 19 countries for its services--long distance, calling card, and Internet communications.

A German money manager says RSL will soon form a joint venture with Germany's Metro Holding, a major retailer, to market RSL's services in Europe. "This venture has a potential worth of millions of dollars for RSL," he says.

"RSL is one of the few pure plays in international telecoms," says Bruce Roberts of SCB Warburg Dillon Read, who notes that RSL's goal is quite modest "but powerful"--gain a 2% to 3% share of the world market in five to seven years by being first or second in each country it enters.

Roberts thinks RSL will hit its tar- get: a 2.5% to 3% share by 2005. He says this implies $2.8 billion in revenues and $359 million in earnings before interest and taxes, up from 1997 sales of $300 million and a loss of $100 million.

Edward Greenberg of Morgan Stanley Dean Witter predicts RSL will be in the black as early as 1999, when he sees earnings of $35.4 million--and more than $350 million by 2003. RSL's Internet network "could be a source of considerable upside potential," says Greenberg.BY GENE G. MARCIALReturn to top

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