With a new financial owner on board, Nasdaq-listed ISP Euroweb International Inc. is looking to keep growing its business in its core markets of Hungary, Romania and Slovakia, and to shift focus further toward becoming a telecom service provider, CEO Csaba Törõ told the BBJ last week. “We’re turning ourselves into a telecom service provider, introducing more and more voice services, and the new owner can introduce Euroweb to new sources of capital to grow,” he said.
Törõ added that Euroweb is getting close to being a company with $50 million revenue, and is the only CEE company listed on the Nasdaq, which is becoming ever more expensive to get listed on.
“The Nasdaq is getting worse and worse for small companies,” he noted. “There are increasingly expensive requirements and procedures to follow.”
Dutch KPN NV, which holds 43.5% of Euroweb International, recently announced it has reached an agreement with Corcyra, a Croatia-registered firm backed by U.S.-based financial investors, about the sale of its shareholding. The sale involves a sum of approximately $8 million, of which $1 million will be paid immediately in the first tranche of the sale. The second tranche will be completed no later than May 1, 2006.
KPN first gained an interest in Euroweb five years ago, and has been trying to offload non-core assets from outside its local markets. It has also been negotiating the sale of its majority stake in Hungarian alternative telecom PanTel Rt to American Stock Exchange-listed Hungarian fixed-line telecom HTCC Rt since the middle of last year.
Törõ admitted that despite Euroweb being a valuable company, it had proven hard to attract a strategic investor.
“Among financial investors, it’s best to find one with experience of the stock exchange, and its ideal for us to have a new owner that supports our original strategy,” he said. “In recent years, Euroweb wasn’t among KPN’s core foreign investments.”
After buying out ISP and IT services firm Elender Business Communication Rt earlier in 2004, in a move Törõ said would create the largest independent ISP in Hungary, and its largest corporate ISP, Euroweb announced at the end of November the offloading of its Czech subsidiary to concentrate on core markets.
On Nov. 30, Euroweb announced the signing of the agreement for the sale of its wholly owned subsidiary, Euroweb Czech Republic s.r.o., to Globix Communications Ltd. The purchase price was $500,000 in cash.
“This strategic decision has been a further step towards our more focused approach, whereby we are concentrating our efforts in countries where Euroweb is considered a market leader,” said Törõ at the time of the sale.
Euroweb International offers internet services and international telephony in Hungary, Romania and Slovakia, via its wholly owned subsidiaries Euroweb Hungary Rt, Euroweb Romania S.A. and Euroweb Slovakia a.s.
“We believe this will enable us to increase our presence and market share in these countries, by allowing us to focus on market consolidation through further acquisitions and mergers, and by introducing new services,” Törõ explained.
On Feb. 4 this year, Euroweb Hungary launched NeoPhoneX, a new internet-based VoIP service that Euroweb claims offers lower per-minute call rates than any other service to date, plus free calls to users of the same service.
This comes four years after Euroweb Hungary introduced NeoPhone, an international calling card that now has 50,000–60,000 customers. The new service has been made possible due to advances in VoIP technology, said Törõ.
Törõ said he expects $3 million–$4 million this year in revenue from NeoPhoneX. He added that NeoPhone cards already generate revenue of around $3 million in Hungary, and have now been introduced in Romania and Slovakia, as will NeoPhoneX.
“$3 million from pre-paid telephony is remarkable for an ISP,” he remarked.
Meanwhile, new research published by consultancy Deloitte indicated that VoIP will remain a niche product in 2005, despite the general consensus among analysts that it will prove a major growth area in future years.
At the same time, the research noted that both call volume and the user base will increase significantly among consumers and businesses.
“Adoption and growth will be limited by shortfalls in VoIP’s quality, consistency and reliability, and the resulting slightly negative image in the marketplace,” said the report. “For enterprises, cost savings will often be less than anticipated.”
Many companies will opt for a hybrid approach, opined the report, using VoIP for internal communications, while sticking to traditional PSTN (public switched telephone network) for external traffic.
Source: BBJ
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16.02.2005