Internet Telephony Innovator Posts Record Growth; Cybertel's Wholesale Unit's Revenues Soar in June for Second Straight Month - Cybertel Communications's June 1999 - Company Financial Information

Cambridge Telcom Report, Sept 6, 1999

Cybertel Communications Corporation has announced the continued rapid increase in the company's wholesale revenues for the second straight month. Cybertel's June sales revenues were approximately $590,000 worth of long-distance sold through their exchanges, up from $400,000 in May. The wholesale division's June sales revenues increased 47.5% over May's sales volumes and 180.9% over April's figures.

"Our wholesale operation continues to produce far beyond our initial expectations and the future outlook seems more and more optimistic," said Richard Mangiarelli, CEO and president of Cybertel. "Wholesale operations are becoming more profitable for the company all the time."

Cybertel's goal for the division is to reach $12 million on an annualized basis, by the end of this year. However, in 2000 the wholesale unit should represent only a very small portion of Cybertel's total sales revenues. Earlier this week Cybertel announced its strategic alliance with TeleFreedom USA Inc. TeleFreedom's 5,000 professionally managed salespeople will immediately begin promoting Cybertel's IP-based long distance at a flat monthly rate or as low as $30 per month.

"By the end of the year, TeleFreedom should be bringing us approximately 50,000 new customers per month. Within the next 12 months, we expect our customer base to exceed one million customers. With a conservative average spending of $40/month or $500 per year, our customer base should generate over $500 million in sales revenues on an annualized basis. When you also take into account our progress in marketing our services to various affinity groups, it is obvious that our traditional wholesale division will not play as significant a role in the future as it is right now," describes Mangiarelli.

The rapid sales revenue of the wholesale division is in part due to a recently signed agreement with Flat Rate Communications, an additional long-distance exchange. Cybertel has also been very aggressive in negotiating rock-bottom rates with foreign carriers for its international long-distance traffic. Cybertel has increased both its sales revenues and profit margins, allowing the company to remain price competitive and pass a portion of these savings on to the customers.

Cybertel is a La Jolla, Calif.-based Voice Over the Internet (IP) Telephony Company. Cybertel is in the process of building a state-of-the-art Internet Telephony network in the Western U.S. that will interconnect with a national IP network to deliver Voice Over the Internet long distance to all 50 states. Cybertel's short-term strategy is to quickly expand its customer base through its unique marketing programs, and then launch its own Internet telephony network, competing with companies such as Level-3 (Nasdaq:LVLT) and Qwest (Nasdaq:QWST).

Internet Protocol (IP) technology is enabling Cybertel to provide a full range of communications services, including long distance and data transmissions as well as other enhanced services to the domestic and international markets. Cybertel will additionally offer a range of Internet access services at varying capacity levels. Cybertel is currently in the process of building a telecommunications network in the western U.S. that utilizes Internet technology.