By Simon Hodgson
ITXC Corp says its latest product will allow major corporations to extend freephone services across the globe. The New York internet telephony firm’s Borderless800SM will earn ITXC a slice of every connection fee charged to an 1-800 user by a telecoms service operator, and promises to create a tidy new revenue stream for the two year old company, as it prepares for its initial public offering on Nasdaq later this year.
ITXC is currently building up what it calls its ‘affiliates’ network, a range of small telcos and carriers in regions including China, Japan and South Korea, in preparation for the service. It will fund the new partnerships by via the Nasdaq listing, either at the end of this month, or in October. The company aims to raise around $75m, selling 6.2 million shares at a price ranging between $11 and 13 per share, which would value the company around the $415m mark.
The cash will fuel partnerships with telecoms companies in Africa and South America as well as building internet hubs for routing the freephone numbers in London, Miami and Singapore. The company expects that the service will be used principally by internet retailers which include a freephone number on their sites. ITXC will also pay off some debt. The company recorded revenue of $7.7m for the six months to June 30 1999, but it also showed net losses of $7.3m.
Analysts greeted Borderless800SM cautiously. Mohammed Hussein-Ismail, a consultant in the Networks and Internet Group at Datamonitor Plc said I think it’ll work, but said the competition would soon catch up. They’re going to be in trouble when global companies start building networks, he said, how many companies are going to spend a lot of money to offer services to people in Africa.
