StockGuru Welcomes ATSI Communications, Inc. (OTCBB: ATSX)
ATSI Communications, Inc. (OTCBB: ATSX)
ATSI Communications, Inc. (OTCBB: ATSX) is a global Voice over Internet protocol (”VoIP”) communications Company based in San Antonio, Texas. The Company operates through its two wholly owned subsidiaries, Digerati Networks, Inc. and Telefamilia Communications, Inc. ATSI also owns a minority interest of a subsidiary in Mexico, ATSI Comunicaciones, S.A. de C.V., which operates under a 30-year government issued telecommunications license similar to those owned by AT&T’s and MCI’s subsidiaries in Mexico. ATSI is focused on serving high-growth international markets with an emphasis on the Latin American region. ATSI’s primary market, Mexico, is the top producer of voice communications traffic with the U.S., making it the most lucrative telecommunications corridor in the world in terms of revenue. Some of the catalysts fueling growth throughout Latin America include the rapid expansion of the Hispanic population in the U.S., the increase in travel between Latin American countries and the U.S., the build-out of local telecommunications networks resulting in an increase in teledensity in Latin countries, and the proliferation of communication devices throughout the region. The Company’s customer base includes a variety of carriers, including top tier providers and emerging operators that generate voice traffic to and from the markets served by ATSI.
To View Our Complete Profile for ATSI Communications, please visit: http://www.stockguru.com/profiles/atsx/
Digerati Networks provides international communications services that consist primarily of transporting voice traffic across the world via the Internet. Digerati owns and operates its own VoIP network for processing voice communication traffic between the United States and rapidly expanding markets in Asia, Europe, the Middle East, and Latin America. Digerati has established numerous partnerships with foreign carriers and network operators to provide its international services. In its VoIP operations, Digerati receives voice traffic from originating carriers who are interconnected to its network via the Internet and routes that traffic over the Internet to local service providers and carriers in the destination countries with whom the Company has agreements or partnerships to manage the quality and completion of the call. Digerati’s global VoIP service enables carriers and other communications service providers to outsource their international voice and fax traffic.
Digerati has developed a solid reputation in the industry for providing high-quality communications services at competitive rates by:
* Forging partnerships with international operators;
* Establishing a state-of-the-art VoIP network developed by Nextone Communications;
* Implementing systems for real-time reporting of VoIP traffic, call quality, revenue, and profitability
* Implementing NexTone’s Network Analysis and Reporting System (”NARS”) that provides a comprehensive set of management tools for its VoIP network
* Aggressively managing the transmission cost per minute for international voice transport through its partnerships and direct relationships with IP-based foreign carriers in key markets;
* Maintaining low overhead costs as compared to its competitors
The growth of the Internet has delivered a parallel, cost efficient, and more flexible network that will ultimately replace the traditional circuit-switched network for voice communications. Voice over Internet Protocol is growing faster than circuit-switched voice traffic and as a result, is revolutionizing the communications industry. International VoIP traffic grew by 38% in 2005 and accounted for 16% of the 260 billion international voice minutes in the same year. Latin America was the top destination region for VoIP traffic with more than one-third of all the world’s international VoIP minutes. The trend is expected to continue as many foreign countries with state-owned telecommunication monopolies or recently deregulated telecommunications industries are still ripe for VoIP growth. The growth in VoIP is driven in part by the growing number of traditional operators migrating towards VoIP to provide services in this lucrative field. Additionally, there are numerous emerging providers launching next generation VoIP networks to deliver services to the consumer and enterprise sectors of the market. This industry shift to VoIP has fueled its explosive growth in recent years. The Company has capitalized on this growth opportunity by tapping into the increased demand for international VoIP services from traditional and emerging telecommunications companies that lack network infrastructure or connectivity in foreign markets. ATSI is well positioned to reap benefits from the VoIP market opportunity through its highly reliable, competitive and low cost Internet communications infrastructure. The Company’s competitive edge is a result of its strategic commitment to acquire the proper international licenses, negotiate favorable interconnection agreements, and establish in-country partnerships with various foreign telecommunication companies. From a financial perspective, ATSI is experiencing dramatic revenue growth and improved financial performance, important factors in today’s “back to basics” telecom marketplace.
ATSI’s other wholly owned subsidiary, Telefamilia Communications, Inc., was formed to capitalize on the opportunities in its largest VoIP market created by the growth of the Latino market in the United States with ties to Mexico. Telefamilia provides Latino consumers with specialized communication services that includes international VoIP calling. U.S. Mexicans spend more than $2 billion a year in telephone calls to Mexico, making U.S./Mexico the world’s largest long-distance corridor in terms of yearly revenue. The growth of this ethnic community continues to drive demand for affordable international communication services. The source of the growth includes several industry, demographic and economic factors as well as an increase in market segment size.
As of 2004, there were 40.4 million Hispanics in the U.S., or 14% of the total U.S. population, making Latinos the nation’s largest and fastest growing minority group. Mexican-Americans living in the U.S., heavily concentrated in Texas and California, make up 62% or 25 million of the total Hispanic population. U.S. After successfully implementing its retail strategy, ATSI’s Telefamilia brand will be used as a pipeline through which additional services such as mobile telephony and cable television can be marketed to this vast Hispanic community.
COMPANY BACKGROUND
From its inception, ATSI’s long-term strategy was to position itself to take advantage of business opportunities that the Company felt would arise with the deregulation of the telecommunications industry within Latin America, particularly Mexico. The scheduled demonopolization of Telmex was written into law in 1990 and Telmex was scheduled to lose its monopoly status in August 1996.
The new laws formalized methods by which companies such as ATSI could compete in the Mexican long distance market. Management believed that by establishing its infrastructure in advance of the anticipated demonopolization, it could take maximum advantage of opportunities that it expected would emerge. ATSI began providing network management services between the U.S. and Mexico and call services from Mexico to the U.S. in 1995.
In July 2000, ATSI secured its valuable Long Distance Concession license in Mexico, and officially began operations under the Concession in Mexico as ATSI Comunicaciones, S.A. de C.V. In June 2003, ATSI established a relationship with a group of Mexican investors that subeseuently acquired a 51% interest in its Mexican subsidiary.
ATSI deployed the capital from the sale of its Mexican Subsidiary to deploy a NexTone powered VoIP network and diversify its routes to include other countries in Latin America and other regions of the world. Since deploying its own VoIP network in July 2004, ATSI has experienced dramatic growth and produced record revenues for every quarter through its fiscal year ended July 31, 2006.
Today, ATSI is well positioned to capitalize on the growth opportunities in a rapidly expanding VoIP market. In 2005, VoIP traffic represented 16% or 42 billion of the 260 billion international minutes processed. As a region, Latin America was the most popular destination in the world for VoIP traffic in 2005.
BUSINESS MODEL AND STRATEGY
Upon deploying its own VoIP network, ATSI’s focus was on providing carrier and network services to and from the Latin American countries where management had established business relationships. As the Company reached key milestones in the Latin American region, ATSI diversified its international VoIP routes to include countries in Asia, the Middle East, and Europe. In 2005, ATSI formed a wholly owned subsidiary, Digerati Networks, to showcase the Company’s growing VoIP business. Through Digerati Networks, ATSI successfully repositioned its brand from being one of a U.S. to Mexico niche provider to that of a cost-effective, full-service international VoIP service provider.
ATSI intends to continue building its global VoIP business while placing an emphasis on higher margin routes and top tier traditional carriers migrating towards VoIP. The Company will also leverage its strength in its core VoIP business and carrier class infrastructure to compete in higher margin consumer and small business IP products. This initiative is evidenced by ATSI’s creation of Telefamilia Communications, a strong and unified retail brand for the Latino market in the U.S. Telefamilia commenced operations in 2005 by introducing a variety of highly-specialized communication services, including international VoIP calling to the underserved Latino market in Texas. ATSI’s initial retail focus is on serving the 25 million Mexicans in the U.S. – a market segment that is mostly overlooked by large service providers. ATSI believes that by executing its marketing and acquisition strategy, the company could eventually reach a dominant position in this niche market.
ATSI believes it can take advantage of the public company model to gain access to public capital. This could further boost ATSI’s growth potential by providing the company with additional capital resources to penetrate the market faster than ever before. ATSI might also be able to leverage its public status to execute synergistic acquisitions or buy companies with complementary services.
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