Phonelink Plc’s chief executive Trevor Burke is so confident of the company’s Tel-Me on-line information service that he recently risked upsetting a Birmingham taxi driver by using it to show him the quickest route to his destination. The company is making a one-for-eight rights issue to get its subscriber base to its goal as comfortably as the software did Burke. At 170 pence – a 50 pence discount on the current price in the market – the issue will raise around ú7m net, which will be used predominantly for promoting Tel-Me. The Prenton, Birkenhead company also reported pre-tax losses of ú3.7m for the year to March 31, up from losses of ú1.8m last time, on turnover up 68% to ú2.1m, and it is applying to graduate from the Unlisted Securities Market to a full listing in August. Tel-Me 2.0 is software that delivers business information such as company profiles, credit ratings, route planners and phone numbers to the desktop over conventional telephone lines, while also providing electronic mail o ver the Internet (CI No 2,651). Some services, such as mail, news headlines and hotel booking are free apart from the price of a short local call, while things such as a full company report, profile and graphs, costs ú24 per enquiry. The package costs ú100 with a modem, ú50 without. The company says the losses are entirely due to the development and early marketing costs of Tel-Me and the turnover does not include any money from the ú2.25m contract with British Telecommunications Plc, under which British Telecom will launch BT T el-Me this month. Burke indicated that the pair would minimise the overlap in terms of customers but would not be drawn on Phonelink’s share of the earnings or whether they would count as Phonelink’s or British Telecom’s subscribers. We share revenues with BT was the official line. Phonelink has 37 of the top 100 UK companies signed up, and 1,450 other businesses with around 9,500 users, with the average user spending about ú20 per month. It has also sold 600 copies to original equipment manufacturers to install on their personal computers. A team of 50 sales executives have targets of 40 new accounts each month working on a heavy commission bias off leads generated by a promotion campaign begun last month.
Quality of business users
Each corporate user has its own account manager. Earlier this year the company had set a target of 100,000 subscribers by August 1996, but even with a significant increase in targets and sales staff, this will not now be reached. Chief operating officer John Lyon was instead emphasising the quality of business users, spending more with a lower churn rate than consumers. The service is due to be augmented by the addition of a catalogue service from W H Smith Plc’s Niceday office products catalogue next year. This will enable businesses to get up-to-the-minute price and product information, including reports from consumer guides, and to purchase the products on-line using an account. Phonelink will earn commission on the products depending on margins. Phil Madden, marketing director, said that plans were also in place to offer access to the World Wide Web of the Internet, but electronic trading on this would be unlikely, he said. The agreement with Worldspan Services Ltd will enable users to look and book airline tickets later this year, with a choice of 300 airlines they can fly, said Madden. International expansion in the English-speaking world is on the cards, and state-owned Telstra Corp in Australia will launch a version of Tel-Me in the first quarter of next year. In the US, Phonelink is in early discussions with partners, thought to be phone companies, and has just signed an agreement with Telstra’s DirectoryNet Inc, Atlanta, Georgia wholly-owned subsidiary. This gives the DataCare unit of Phonelink access to its phone number directory. Cash balances at the year-end were ú2.9m. The company is now concentrating on pushing Tel-Me hard and of the 155 staff, 77 work in sales. Lyon said that the company’s strategy was to get active users generating rev
enues, hence the focus on the business community, especially the mobile data sector, and the plans for commerce and international expansion.
