World Telecom Plc, the ambitiously-named UK supplier of personal telephone charge cards is going to the Alternative Investment Market to raise capital for rapid expansion. The London-based company is hoping to raise 7.1m pounds from the issue, giving a market capitalization of 32m pounds at the issue price. The figures supporting this placing make exciting reading. Following a start up with just 500,000 pounds of capital in 1994, the management team have taken revenue to 4.3m pounds in the year to December 1996 from just 100,000 pounds in 1994. Although the company has yet to make a profit, the word from the board is that it is currently at break even in 1997. The main product, producing 80% of revenue, is World Telecom’s Global Calling Card which enables the traveling customer to place a call from any country to any country without using local currency or hotel phone services. World Telecom claims it can provide this service faster and up to 50% cheaper than any current competitors in the UK. The remaining 20% of revenue derives from pre-paid phone cards purchased over the counter with a specified value. World Telecom is very close to announcing up to three deals with unnamed high street stores that want to sell their own branded cards to undercut the British Telecommunications Plc cards they currently stock. In order to avoid high marketing and advertising budgets, the company has opted to negotiate deals with business partners including British Aerospace Plc, Honeywell Inc and Xerox Corp’s Rank Xerox Ltd. Calling cards will be rolled out to all the frequent travelers within these organizations over two to three years. This gives the company its off-balance-sheet asset, an established client base of international business people. World Telecom Plc says it needs this AIM flotation to invest in its range of value-added telecom services which it will sell to these existing users. The products for introduction as early as 1997 include follow-me numbers, voice messaging and the text-to- speech conversion features that enable access to electronic mail from a telephone. Other interesting projects include a collaboration with the UK’s National Westminster Bank Plc to provide credit cards combined with phone charge cards. World Telecom sees itself as a provider of integrated personal communication packages at the leading edge of technology. With a solid income stream from its charge card business and plenty of revenue generating ideas in the pipeline, this is one to watch. The placing is being handled by Collins Stewart Ltd and dealing is to start March 27.
