NTOP 3/9/04 earnings conference call (rather than a transcript, which is an all nite job)
.stuff in brackets or parenthesis represents my comments, inserted elliptically ... into context.
Ntop is now completely out of wholesale calling card business in the United States. There will be no more quarterly expenses because of wholesale U.S. card calling.
Ntop is the only provider in world today offering both PacketCable telephony and SIP-based voIP.
Ntop feels if it offers an individual modem box, like Vonage, it will have a negative impact on its overall offerings. Ntop believes this could have/could have had a negative effect re obtaining agreements, and re the perception “it’s not really primary line service, so negative feedback about what ntop supplied if it supplied the Vonage solution,” would come to negatively impact Ntop’s reputation.
Wholesale voIP is price competitive worldwide, and going to continue to be very price competitive. NTOP is being forced to either bypass Internet cafes if its margins are lowered too much by accepting the business in certain regions; or sometimes will accept lower rates to obtain certain pieces of businesses if that is what its sales managers recommend.
Liberty Puerto Rico wanted cable telephony subscribership held steady in Puerto Rico while it trained its sales reps and truck rollout drivers. It took 8 weeks to get 1,000 subscribers. The customer – Liberty Media Puerto Rico wanted a trial with 200 customers; wanted it to ramp up to 1,000 and not more so drivers and sales reps in Puerto Rico could be trained, then Liberty after they are trained, Liberty will role out cable telephony to its Puerto Rico footprint. (Greenberg: “That’s what the customer! wants, yes sir.”)
There are at least 5 “situations” Ntop has to announce, which includes the U.S., South America, and Western Europe. People were leaving ‘tonight” (March 9) for some of those areas.
Some of the 5 situations will be MOUs and some will be contracts. People are installing infrastructure concurrently simultaneously with lawyers working out the contracts, instead of MOUs. Announcements and deployment for these msos, will be simultaneous.
Greenberg’s deliberately selected example: If somebody selected Net2Phone at the early part of the year, and it takes 90 days to get to dial tone at the head end (deploy), and depending on when the selection is made you will see the contract announcement with a full-blown deployment.
[Prior to its earnings announcement last week (prior means 2 weeks ago), Mediacom said it would announce details of its voIP deployment within the ensuring 30 days.]
cabledatacomnews.com
(the 5 msos mentioned in the url are coincidental – not exactly or necessarily the cable msos references below) [We're very excited with what we're seeing in the whole VoIP space," said John Pascarelli, executive vice president of operations for Mediacom. "We'll be making our announcement in the next 30 days." – url came out 1 March; comment made prior to that.]
Cable msos will look around, but evidently they come to Net2Phone – because of what it offers that others don’t. Nobody else has what Net2Phone has. So far, so good with what’s happening with NTOP.
Greenberg said: Each contract is different – every cable mso is different, and their footprint may differ – if they are being hurt by satellite in one region, or DSL and pricing on high speed (fyi, the url above re Mediacom mentions it will marketing first to high speed subscribers)– so can’t be a master contract situation. What takes time is not the selection of net2phone once the cable company sees its tech in Puerto Rico, for example. What takes time is NTOP viewing the cable company’s infrastructure and then the drafting to see that it meets the cable msos needs so that it is done once, to last for next 10 years. Ntop can be selected by a company as its vendor. Then NTOP goes out to review its structure, to achieve dial tone in a 90-dayperiod. During that time period, the lawyers can draft the agreements.
[comment re looking at experiential development: What is now in Greenberg’s head re deployment, and heading up issue responses, makes him an invaluable asset. That can’t be replaced by new, inexperienced Net2phone specific hiring. He’s in an ebullient mood. At some points, he was having fun in the conference call – not like the last conference where we were awaiting news and he had nothing to supply. That’s my insight; I’m not saying that to promote. He’s looking forward to being rewarded (feels vindicated) – that’s what his comment re universal acclaim/lawyers meant on a Steve Greenberg unconscious level. – A la the movie “Grease: -- “VoIP is the word and everybody is using it. It’s no longer disruptive, and everybody’s using it.”]
[comment: the more ntop’s share value increases, the more asset value NTOP drives into IDT because IDT gets a fixed number of Class A NTOP shares each quarter, for the next five years.]
There are 5 situations right now in which Net2phone is doing the actual provisioning – domestically and internationally. This is ongoing as we speak. It depends when you start counting during the year when the announcements come out. My take is then if someone signed up in January, we see something at the end of March; in February at the end of April, and if in March, at the end of May/June.
Five already doing some engineering work for, and in the process of negotiating an MOU. That’s beyond Cebridge. Doesn’t include Cebridge. Nothing has changed re Cebridge; it’s going forward and will become definitive in the near future as well. They have selected NTOP and that they intend to deploy as has been spoken about in the past.
These are PacketCable deals – not SIP. [So these are tier 2 cable telephony deployments somewhere in the world Net2Phone is undertaking. There are 5 deals to be announced – all new.]
Ntop will file 10Q in about a week.
Ntop has no classic debt at all.
Net2Phone sees 10% of 82 million of homes passed as NTOP’s target over the next four years. That’s what they believe. Greenberg said that throughout the road show and guided that ever since. That is tier 2 and tier 3 cable mso operators. It excludes any tier 1, it excludes anything in Asia, it excludes anything with Charter and Adelphia, and it excludes anything with any major Liberty Media property.
The goal of 10% of 82 million homes passed in four plus years includes tier 2 and tier 3 cable companies but not the exceptions above. Deals with these entities would change the forecast. That is what he was talking about. He was only talking about the forecast.
[Comment: Because ntop has maintained this as its achievable target through ongoing analyst meetings over a period of months while it dealt with tier 2 and 3 cable msos and now in this conference call reiterated that the target is achievable, knowing the cable mso deals in hand, the company has to feel they can be providing cable telephony services to 8.2 million homes in 4 years, exclusive of anything related to SIP voIP; and exclusive of company contributions from the global retail voIP division.]
For, overall cash burn you’re talking about $6.5 - $7 million cash burn for the quarter.
Cash increased 51.1 million from follow-on share offering. The company reported cash, cash equivalents and marketable securities of $138.8 million as of January 31, 2004.
It was an informative call. |
