TSX: PHD Michael Vazquez, President and COO Gary

TSX: PHD
Michael Vazquez, President and COO
Gary Clifford, Chairman and CEO
Investor Presentation
Fall 2013
A multi branded Global Communications Company
Disclaimer
This presentation contains forward-looking statements, which
may be identified by words like "expects", "anticipates", "plans",
"intends", "indicates" or similar expressions. These statements
are not a guarantee of future performance and are inherently
subject to risks and uncertainties. Phonetime’s actual results
could differ materially from those currently anticipated due to a
number of factors set forth in reports and other documents filed
by the Company with Canadian securities regulatory authorities
from time to time.
3
Customers
Reliable
Effective
Professional
A leading global supplier of communication services
4
Primary Competitors
Numerous small competitors
Management
•
•
•
•
•
Gary Clifford – Chairman and Chief Executive Officer
•
10 years telecommunications experience
•
Seasoned operator and M&A specialist
Mike Vazquez – President, Phonetime
•
20 years telecommunications experience
•
Seasoned operator, network and IT specialist
Ali Guven Kivilcim – President of Tellza Technologies
•
20 years of telecommunications experience
•
Network, IT and Software specialist
Alec Gramont – General Manager, Route Dynamic
•
15 years telecommunications experience
•
International business experience with both start ups and within corporate environments
•
MBA in International Business and Finance
Ruddy McGlashan – General Manager, GoLifeTel
•
3o years telecommunications experience
•
International business experience with both start ups and within corporate environments
•
Seasoned operator, network and IT specialist
Seasoned Management Team
Financials
[amounts in thousands of U.S. dollars, except per share information]
For the three and six months ended June 30
2013
$
Revenue
Cost of revenue
Gross margin
Operating expenses
EBITDA
Net and comprehensive income for the period
EPS - basic and diluted
Weighted-average number of common shares outstanding
- basic and diluted
As at
$
2013
$
2012
$
Unaudited
39,792
37,403
2,389
1,037
1,352
804
0.01
Unaudited
24,542
22,798
1,744
1,094
650
280
0.00
Unaudited
73,842
69,833
4,009
1,913
2,096
1,208
0.01
Unaudited
48,185
44,532
3,653
2,366
1,287
600
0.00
151,231,492
158,731,492
151,231,492
158,731,492
June 30,
2013
March 31,
2013
December 31,
2012
$
Cash
Total current assets
Total Assets
Bank Debt
Total Debt
Total current liabilities
Total liabilities
Total shareholders' equity
2012
Unaudited
2,739
13,609
24,792
—
—
12,267
12,402
12,390
24,792
$
Unaudited
1,230
11,912
23,613
—
—
11,846
12,040
11,573
23,613
Financial strength growing
$
Unaudited
2,288
9,900
21,794
—
—
10,383
10,638
11,156
21,794
Stock Price History
Value recognition started; valuation multiple remains low
A Global Carrier to Carrier Service Provider for voice services
• Phonetime is a leading provider of international telecommunications
companies globally.
• Its highlights include:
• Has a current annual run rate of $150 Million
• Growing at 30% annually in 2013
• Profitable since 2011
• Provides 4 billion minutes of communication annually
• Averages 60 million phone calls per month
• Utilizes a powerful proprietary software-based Procurement Engine
• Has an experienced team of traders of minutes
• Is lead by an seasoned management team
• Boasts over 1000 commercial agreements worldwide and over 500 active
billing customers
The SMS Initiative:
Established July 2013
A Global Carrier to Carrier Service Provider for SMS Services
The SMS Space
• Tellza Group to take advantage of significant opportunities in the SMS
Market through a new Group Company called: Route Dynamix
• Global Market Volume: about 10 trillion SMS messages in 2012
• Worldwide SMS revenue in 2013 north of $150 billion for the first time
• SMS is the most widespread digital communications platform to date and
is still growing. The Cisco Visual Networking Index (VNI) Service Adoption
Forecast predicts that 90% of global mobile subscribers will be using SMS
by 2016, up from 74% in 2011
• SMS is an incredibly powerful communications medium. Text messages
can be sent even with a very low-strength cell signal or a congested
network. SMS is asynchronous, inexpensive and predictably priced, and
works on any handset. In much of the world, SMS is often the only digital
data that works, or works reliably
Value creation opportunity
existing
supply chain12
Proprietary & Confidential -within
Phonetime Netowrks,
Inc.
9/17/2013
Window of Opportunity
• Window of opportunity is NOW as OTT Messaging is spreading but SMS is
still “king” and will continue to be for some time
• OTT taking over more significantly in US and Europe. Latam, Asia, and
Africa will still represent considerable revenue opportunities
• MNO’s (our customers) are focusing on SMS intently; according to Ovum
Research, MNO’s will lose $23bn in mobile messaging revenue in 2012, as
they lose customers to IP-based (OTT) social messaging services
• SMS is very profitable; according to PORTIO Research, SMS messaging
brings in $1,000 for every MB of data transmitted compared with 2 to 13
cents per MB that comes in from a wireless Internet data plan
• Platform selected and purchased
• Customizations and testing underway
• Traffic and revenue by the of 2013
SMS: Low risk Proprietary
high revenue
andNetowrks,
margin
opportunity
& Confidential - Phonetime
Inc.
9/17/2013
Over-the-Top (OTT) messaging v SMS
13
By the Numbers
Message Trend
OTT messages
SMS messages
MMS messages
2011
3,492 billion
7,844 billion
207 billion
2012
5,846 billion
8,600 billion
228 billion
2016
20,293 billion
9,554 billion
277 billion
Messaging has the
potential
to outpace
Proprietary
& Confidential - Phonetime
Netowrks, Inc. voice business14
9/17/2013
The Mobile Initiative
Established : August 2013
Mobile technology has become an extension of us
Business Concept
GoLiveTel is seeking to become a Mobile Virtual Network Operator
(“MVNO”) that will distribute and sells cell phones based on prepaid
discount wireless airtime plans with a variety of comprehensive talk,
text and data services for use in Domestic US. We are also seeking
status to become a service provider to “Lifeline Program”.
16
The Life Line Program
The U.S. Government is providing free cell phones and free plans to low-income families
across America.
A little-publicized program from the Reagan era that has been providing low-income
households with free or subsidized phone services for more than 25 years has recently begun
offering free cell phones and plans in lieu of a land line. The program is known as Lifeline”, and
anyone with an income at or below 135% of the federal poverty guideline can qualify. For a
family of three, that means an income of around $26,000 or less qualifies for a free cell
phone. The person next to you might be on a free phone plan.
Lifeline is providing free cell phones in lieu of land lines because of the costs and cumbersome
regulations governing traditional copper networks across America. Essentially, it costs more to
provide land line services than it does to provide a free cell phone and free plan. The way it
works is relatively straightforward. Carriers receive a flat payment of $10 per month for each
family, which covers the cost of one basic phone and plan. There are no connection fees,
installation charges, or wires to be installed, so the end result is a less expensive service with
greater coverage and portability.
17
Industry Analysis
• As of May 2012, the US wireless industry is valued at $195.5 billion dollars,
ranking it amongst the top industries in the nation
• In the US Market, prepaid wireless service is the fastest growing service
segment in the wireless industry
• By 2015 prepaid is expected to be 55% of market at 182M users, meaning 82M
users will be migrating to prepaid in the next 3-4 years
• Compared to Europe and the rest of the world, the US is behind in adopting this
new trend of prepaid packages
18
Industry Analysis
US Cellular Technologies
Global System for Mobile
Communications (“GSM”)
Code Division Multiple Access (“CDMA”)
•
SIM card based platform
•
•
Customers can move wireless plan &
data from one handset to another by
purchasing or bringing their own phone
Customer must purchase carrier specific
handsets
•
Declining trend in activations due to
restrictions of handset choice & late
adoption of smart phones on the CDMA
networks
•
Shortage of CDMA handsets in
marketplace
•
80-85% of global market share
•
Provides great opportunity to sell SIM
cards separate from the handset device
Prepaid Market Segment:
•
•
•
CDMA represents 75% of the US prepaid market – GSM have traditionally been less
aggressive in adopting wholesale MVNO partners
Growth opportunity for GSM based MVNO’s as GSM-based handset use in the US
increases
“Two out of three people who sign up for new wireless service in the US opt to go
prepaid, instead of being locked into a lengthy and costly contract” – New Millennium
Research Council
19
Wireless Market
Prepaid
Postpaid
Main players in postpaid market
Focused on un-banked, low/no credit, & immigrants
Hybrid regional network carriers still building platform
20
Marketing & Sales
• Unbanked
• Credit Challenged
• Bargain Wireless Shoppers
• Dissatisfied postpaid users
• Fixed Budget Customers
• Immigrants more familiar
with prepaid
• Trends have indicated that
wireless handsets are very
important to user
• More wireless users
migrating towards smart
phones
Customer
Target
Segment
Usage
Needs and
Behavior
Handset
Device
Type
Shopping
Channel
• High Talk Users
• International Callers
• Big Data Appetites
• Infrequent communicators
• Localized neighborhoods
• Ethnic Target Segments
Shops in local market
• Bodegas
• Retail Locations
21
Acquired : October 2013
Tel3 is the best way to make cheap International calls
TEL3
TEL3 is the best way to make cheap international calls.
Simplicity meets Savings in International Calling.
17+ years
in Business
Still the leading innovator with
alternative products, internal
Software Development and
Design team.
Founded
Developed its own
“calling card platform”
Started the agent
program
Expanded the program
to over 20 countries
COMPANY PROFILE
1994
1999
2003
2012
COMPANY PROFILE
Trusted Brand
With our partnership with TrustPilot we started collecting
feedbacks from our customers and currently rated as 4 stars.
TEL3 has A+ Rating with BBB.
Over 85% Customer Satisfaction Ratio for our Call Center.
Digital Assets
TEL3
Website
TEL3Advantage
Website
TEL3
Agent Network
17K users
55K users
267 agents
CRM
Application
ASSET PROFILE
What is the
Service?
All TEL3 plans are prepaid
Dial-Around International
Long Distance Services.
You can make International
calls from any phone at a
very low rate.
PRODUCTS & SERVICES
Now call back
from more than
20 countries is
available.
PRODUCTS & SERVICES
Calling back from any country in TEL3
network to the U.S. is much cheaper (about
2¢ a min all continental U.S.) So, now users
can take advantage of that and pay much
less with TEL3.
Simplicity meets
Savings with TEL3
Simple
to use
Users can start using
TEL3 in 60 seconds.
Calling is pin-less and
simple with many time
saving features like
speed dial and phone
recognition.
Save
anytime
Users will always be
in control of their
budget with the
prepaid account and
get recharge
coupons via SMS,
Facebook or Twitter
messages.
Mobile
Make calling easier
with free iPhone,
Android and Cell
Phone apps that dial
directly from your
address book.
PRODUCTS & SERVICES
PRODUCTS & SERVICES
Dial Direct from your cell phone.
Download TEL3 free app to your phone, and dial International numbers from your
address book or direct – no pin, no account number to enter. Simple and fast.
Apps for iPhone, Android, Blackberry + Java enabled phones.
PRODUCTS & SERVICES
New Services
New features -> new uses for customers
TEL3 is planning to add new products and services to
enhance its service and be able to compete in this very
competitive market.
Introduce
Intelligent
Follow Me
Add
VoIP apps
Add Wireless Top
Ups
Add
International
Credit Cards
Introduce
International
Access Numbers
Use Case:
Pepe will be able
to sign up with
TEL3 with his
Brazilian credit
card in Brazil and
start talking via
local numbers.
Use Case:
Marcus will be
able to top up his
mom’s cell phone
in Germany from
his TEL3 account.
Use Case:
Jose in Mexico
will be able to
make and receive
voip calls on his
iPhone app or on
his PC by logging
in to his TEL3
account.
Use Case:
William in Australia will
get local TEL3 numbers
for his business in three
different counties and
forward them to his apps
and phones (cell phone
and office landline). So
he can answer any
customer calls from any
of the countries he is
operating where ever
and when ever. All the
calls are local for his
customers, and William
gets the calls to his
phones by paying only
pennies via TEL3
intelligent follow me.
Acquired : October 2013
A platform service provider to Communication Companies
Technology
• Tellza has acquired and developed a number of Communication platforms
that can allow sales and marketing plans to be implemented cost
effectively by business people wishing to be in the Communications
business.
• We are presently rolling out our CSP (“Communications Service Provider”)
model to our industry:
• Our offering includes: enabling, managing, and or hosting services for
Carriers and Sales and Marketing Companies in the Communications
space.
• Our platforms have been proven efficient and effective over billions of
minutes over the last 10 years.
• Our team of software developers is World Class and have worked together
for a number of years.
Our Real ValueProprietary
Add &to
the- Communications
Industry
Confidential
Phonetime Netowrks, Inc.
9/17/2013
33
Leading Routing, Switching, Monitoring & Billing Engine
Scalability
24x7x365
Reporting and Control
Real
time
automated
monitoring
of and
Telcocontrol
markets
Real
time
automated
monitoring
34
TSX: PHD
Michael Vazquez, President and COO
Gary Clifford, Chairman and CEO
Investor Presentation
Fall 2013