Hi Again Everyone,
I just received this update on the DCI conference call from Kathy
Knight-McConnell (Investor To Investor). My personal thanks goes out to
Kathy for all her hard work. Now you can see why I was waiting for her
report as anything I could have said would have paled in comparison. She
takes a ton of notes and then follows it up with the best "due
diligence" I have ever seen! I think you will agree when you read the
following.
"Grupo Brad de Original P & P Man"
Dear Investor to Investor readers:
This is a summary of the DCI Telecommunications conference call that took
place on January 25, 1999 at 4pm. Joe Murphy, Jack Adams and Daniel Murphy
were on the line representing DCTC. There were 40 investors on the line
freely asking questions.
Joe Murphy started out by saying that he could not make any comments on the
quiet period, except that it would enhance shareholder value. I asked if he
could give an idea as to how long the QP would be in place and he said he
wished it would end tomorrow, but did not think it would be as long as 90
days. He doesn't anticipate it taking too long a period to end it.
He said that DCI is growing far in excess of the growth for the general
Telecom industry, which has a growth rate in the range of 18 - 20%. DCI will
be doing about $1 billion dollars over the next two years.
Joe said he went Europe with some trepidations due to past experiences with
people and other company's switches. He was "overwhelmed" and "pleasantly
surprised" when he got over there for the following reasons:
He found excellent personnel due to personnel purges. He said that people in
Spain are less technically oriented. They are now hiring financial people for
the he offices in Madrid which will be open any day now. It will house a
"super- switch" which is capable of "lighting up" all of Madrid.
Someone asked how much future potential revenue would come out of the Super
Switch in Madrid. Joe said it could potentially handle every telephone call
in the entire Madrid area. He also said that by June or July there would be
26 active sales reps in that area alone!
DCI will be doing targeted advertising in Spain, magazines, newspapers, etc.
Television advertising is too expensive for now.
In Denmark, DCI is co-locating a switch with FaciliCom. The switch which is
the smallest was fully maxed out with 5 times the volume is was designed to
carry. It is a modular switch that was designed to handle about $2-3 million
of traffic annually. It is being upgraded early as next week. Meanwhile the
overflow is being handled by FaciliCom.
I checked and found out that FaciliCom International is a Washington-based
network wholesaler which owns capacity on seven undersea fibre systems and two
public telephone companies, Nordiska Tele8 of Sweden, and Teleone of Finland.
FaciliCom is a member of the Pennsylvania-based Armstrong Group of Companies,
a privately-held cartel of telecommunications companies which specializes in
reselling its high-speed network to other carriers. Nordiska Tele8 is the
subsidiary company that DCI has the co-location agreement with.
IXC will be terminating (don't misunderstand the meaning of terminating is for
landing rights, not ending anything) traffic over the DCI switch in Madrid.
Traffic flowing through the lines into Spain could be very substantial going
through the DCI switch. This will be predominately long distance traffic.
Joe said that DCI is now proving that it is a predominately long distance
company, not a prepaid calling card company. He also said that the switching
facility in Madrid is part of a well laid plan that began about a year ago
which has been running traffic and growing their ability to provide long
distance. Until now they were using someone else's switch but are now putting
in their own. This will greatly increase their margins and future growth.
Two more switches are being installed. One at 60 Hudson St. in NYC and the
other one is a redeploy of a larger switch in London that is comparable to the
one in Madrid. I asked if I could be invited down to see the switch in NYC
when Joe Murphy is here. I will let you know when I see it.
Investor Relations will be sending out somewhere between 2500-3600 mailers
this week, which the shareholders should receive by the end of the week or
over the weekend on the WaveTech situation. WaveTech's S-4 was filed with the
SEC and they expect comments from the SEC by end of month. They expect to
send out proxies in first week of February.
Joe said that when DCI and WaveTech went before the NASDAQ, Joe was asked why
he wanted to go through with the merger with WaveTech since DCI was already
qualified for the NASDAQ (except for the minimum bid price). He told the
NASDAQ that he would go through with the deal under any circumstances because
WaveTech brings exciting products, a clean company, 2700 shareholders and $2
million in funds that will be utilized for the first tranche of switches to
the deal.
WaveTech has to go through with the deal or be delisted from the NASDAQ. Word
is that WaveTech may be announcing something to do with the Internet during
the next 30 days.
On the subject of the Series F - There is none of that stock on the market and
it will be taken out in the next round of financing. Joe said that he has to
balance getting the switches up and running quickly, so as to get the billable
minutes with buying out the Series F.
DCI is doing an initial financing which they will refinance at better terms
later. There will be a press release on the financing that will detail
everything to do with the switches and billable minutes, etc. That should be
out before too long, as soon as the financing is completed.
I asked for information about the progress with the AMEX. Joe said that the
AMEX continues to ask for more information. He said he can see why the AMEX
is merging with the NASDAQ, since they spend an inordinate amount of time just
collecting information. Someone asked which exchange that Joe preferred to be
listed on and he replied "either one". My supposition is that the first one
to go through is the best one for the company. Anything to get off the
bulletin board.
Joe said that he has a photograph of George Bush Sr. at the Madrid switch.
George is President of Cable Crossings. Not sure what to read into that.
Perhaps it is somehow associated with the QP. Or maybe just a point of
interest.
Joe said that the switches being installed will "really change the ball game
dramatically."
Muller Media is up for sale. That joint venture is ramping up on prepaid
calling cards, but has sustained the largest loss. It should be cash flow
positive in April and profitable in March.
The Canada CardCall is marginally profitable. Joe wants to sell that section.
He said Edge is doing "magnificently". Donnie Gross is absolutely amazing!
He is 30 years old and has taken the company from $5.4 million in yearly
revenue to $1.6 million a week!!! There was some disruption due to the shut
down of Discount Communications, but Edge should be back to $1.6 million a
week in February.
Time /WorldCom deal is in a 5 month ramp up. They had to recall the cards in
Italy and do a reprint due to some squiggly lines in the design meaning
something in Italian that the Italians were not happy with.
Cyberfax is up for sale.
The third quarter financial report will be released by February 15th, maybe
sooner, but that is the filing deadline.
Discount Communications has been assigned a "zero" for the accounting books.
If they collect it, that will be a plus, but they aren't counting it at this
time. Joe is happy just to have the IXC deal which he was able to negotiate
due to the default of Discount Communications.
Jefferies, the institutional banker is prepared to put up a substantial amount
of money once the switches are in place. $100 million has been mentioned as a
possible amount.
NatWest is also showing interest in providing the financing.
That's it folks.
Kathy Knight-McConnell
Investor to Investor
imall.com
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