cable telephony segment from JP Morgan conference:
May 3-6, 2004
JP Morgan Technology and Telecom Conference
San Francisco, CA
Speaking:
Steve Greenberg
Chief Executive Officer
May 6 at 10:30 a.m.
JP Morgan Analyst: Jason Bazinet
Jason: Good Afternoon. My name is Jason Bazinet. I am JP Morgan’s senior equity analyst covering the telecom, cable, and satellite names. I am very pleased today to have Steven Greenberg today with us, CEO of Net2Phone. Net2Pone is in midst of a pretty interesting transformation I think Steve is going to tell us about. After this, we’re going to have a break. We’ll have some Q&A I suspect on the back end and then we’ll go to a smaller room so you guys can have a chance to ask additional questions.
Greenberg:
Net2Phone Cable Telephony:
This is the chart I want to talk most about today and I want to put this in context.
The following cable companies have already selected Net2Phone. These entities have actually selected Net2Phone. When I say selected I am using Net2Phone purposely. Thes entities have actually selected Net2Phone.
Liberty CableVision of Puerto Rico, which is our model. 300,000 homes passed.
Cequel, has been growing; internal issues; everything there couldn’t be better; met at New Orleans together, 730,000 homes passed.
Altice, very good markets in Belgium and France; 500,000 homes passed.
Northland, 10 different states, 350, 000 homes passed.
To date: Entities that selected Net2Phone:
1.8 million today; and well over 2.0 million homes passed by the end of the month.
We’ve done these announcements; and there will be more coming.
[That will move NTOP into first place in terms of homes passed. The second company has 1.5 million, and is no longer competing.]
Additional MSOs NTOP is talking to – (U.S.) – for instance list. I am not telling you we are going to sign all of them. But we are going to do petty well from this list. We are talking to every single one of them.
[NTOP has now responded to RFPs from Charter and Adelphia. This is absent anything happening with Charter. And anything happening with Adelphia.]
Those companies that don’t have the financial strength of a Cox or a Time Warner –
Charter
Brighthouse
Mediacom
Insight
RCN Corp
WideOpenWest
Bresnan Communications
Cequel
We’ve announced Cequel. There will be others in the not too distant future.
Let me talk about Charter because I am asked about it regularly. Charter has publicly announced the following – and remember Charter, unlike others of its size, does have some issues in terms of its balance sheet because of its particular debt structure yet they know they must roll out telephony because they have major problems with satellites in certain venues. So Carl Vogel, the CEO of Charter has said that for their top 8 markets, they are going to do what the Cox’s, the Time Warner’s, and the Comcast’s are doing, and that is they are going to try and do it internally. But he said for markets 9-22, and perhaps 25, they are going to look to an outsourced solution because they have to get it up and running, and they have mentioned Net2Phone is a company they are talking to, and that is also true.
So the numbers I gave you earlier in terms of the 8.2 million as a 10% factor of 82 million does not include Charter. Nor does it include Adelphia – and everybody knows that Adelphia today because of an announcement by the bankruptcy court may be in play. You know that is a large number of subscribers. It could go in any one of a number of directions, but whether or not that happens, Adelphia now is also in the process of having let out an RFP. We have responded to that RFP. We talked to them. But that is a little more of a hazy picture because depending upon where Adelphia goes – whether it’s in one piece, whether it’s in various pieces. It could be very good for Net2Phone. It could be something else, depending on what happens. By I want to repeat again that I am not including either Charter or Adelphia in what I am talking about today.
…
Why is it that we do have something that we do have something that is perhaps a first to market advantage.
First of all, we’re not cable people. We’re voIP people. But we do have a good partner in John Malone. And you couldn’t have a better ambassador into the cable world than Dr. Malone. And he is more than helpful. So from the get go, we do have an entrée.
Then when we do get in, we can say the following. As long as you give us this high speed connection, we will do all the provisioning you need. All the engineering you need. We will train your people.
-- comments re IDT/Winstar connection, routing, etc.
**We also announced last week an agreement with Level 3 – because we know again what is in our pipeline. There may be some venues and you’ll see announcements very soon where we where we need to expand our footprint and we entered into this agreement with Level 3 knowing what is coming.
CVOS comments – CVOS manages all the back office stuff (from Adir); crucial piece.
We’re going to get the MSO trained, we’ll do telephony, manage network. We’re living in bundled world. – bundled products, which is what we are offering, is what is going to do it. We’re making our bed with MSO. We do not sell direct to the consumer. We don’t take advantage of their bandwidth without their getting in. We do believe as some analysts have said there is going to be more than a $30 billion revenue shift from the RBOCs to the cable companies in the short term, and we want to be there to take advantage of it and we believe we’re going to do that.
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