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VIPC Communications Inc.
Trading range: $$0.25 - 0.50
VIPC Targets Lucrative China VOIP Markets
Annual VOIP call traffic revenues in Asia are projected to grow from US$230 million today to over $6.9 billion by 2005, according to industry monitor IDG. One of the rising stars in this rapidly developing marketplace is VIPC Communications, a high growth company with escalating revenues and key strategic partners in China.
Considerations: - Strategic alliance with Chengdu
Jiabin, a leading ISP and VOIP provider in China - one of the world’s
largest and most rapidly growing telecom markets - Alliance allows VIPC to enter
booming Chinese telecom markets at a low cost base. VIPC has option to
acquire 100% of Jiabin after payment of $2.7 M loan. - Partnership provides VIPC with 75%
of profits from all outgoing calls (once two-way network in place) and 25%
of profits from calls coming into China (infrastructure already
established) - Aggressive domestic and
international expansion underway: Infrastructure investment of $6 million
-VIPC now controls all major assets
and key strategic alliances outside China - VIPC/Jiabin’s combined call traffic
projected to rise from 48 million minutes annually to 304 million minutes
(two-way call traffic) in 2003
- Strategic alliance with Chengdu Jiabin, a leading ISP and VOIP provider in China - one of the world’s largest and most rapidly growing telecom markets
- Alliance allows VIPC to enter booming Chinese telecom markets at a low cost base. VIPC has option to acquire 100% of Jiabin after payment of $2.7 M loan.
- Partnership provides VIPC with 75% of profits from all outgoing calls (once two-way network in place) and 25% of profits from calls coming into China (infrastructure already established)
- Aggressive domestic and international expansion underway: Infrastructure investment of $6 million
-VIPC now controls all major assets and key strategic alliances outside China
- VIPC/Jiabin’s combined call traffic projected to rise from 48 million minutes annually to 304 million minutes (two-way call traffic) in 2003
The agreement with Jiabin provides VIPC with immediate revenues, powerful strategic alliances and entry into one of the world’s most vibrant telecommunications markets. Key Alliance. Unlike numerous countries that have deregulated their telecommunications industries during the last decade, at present, government policy does not permit foreign ownership of telecommunications companies operating within China.
VIPC’s business agreement with Jiabin allows the company to participate in the revenues generated within the country’s international telephone call industry, which have grown from US$1.29 billion in 1997 to over $6 billion in 1999. At present, VOIP Telephony market share is estimated at only 5% in China. By 2005, It is predicted that the call traffic market in China will reach 60 billion minutes, an estimated 15% of the global market.
Jiabin has already established a strong competitive advantage in this rapidly growing sector as the lowest cost VOIP provider in Mainland China. The company has negotiated a dramatically reduced rate on bandwidth leasing costs from China Unicom and utilizes compression technology to further reduce costs.
Expansion Underway. VIPC is actively building an integrated VOIP network both within Mainland China and worldwide to provide two-way call traffic for the largest populated region in the world.
Under its agreement with Jiabin, VIPC is providing a five-year US$2.7 million loan to expand Jiabin’s domestic network from the current 8 locations to a network of 20 locations.
Through Jiabin’s business partnership with China Unicom, China’s second largest telecommunications firm, integrating these 20 locations into one network will allow the company to supply VOIP to over 300 cities in China.
VIPC will invest an additional US$3.3 million to expand Jiabin’s international POP network to at least 20 cities worldwide.
Within the next three months, VIPC will set up initial POP operations in Moscow and New York and enlarge its present Hong Kong hub.
Other POP sites are currently being evaluated in Japan, Thailand, Indonesia, North America and Europe in cities with large Chinese populations.
At present, Jiabin’s existing infrastructure only places calls coming in to China. As VIPC builds its network outside of China and two-way communications commence, revenues are expected to increase exponentially and traffic is expected to grow from approximately 48 million minutes annualized in 2000 (one-way termination service to Mainland China) to approximately 304 million minutes (two-way call traffic) in 2003.
Once the two-way network is in place, VIPC will receive 75% of the profits on revenues generated by calls made from China to VIPC’s network outside of China.
Importantly, China Unicom has indicated it will increase its outgoing traffic through Jiabin’s and VIPC’s international network when Jiabin’s 8-city network in China is fully integrated.
Profitable from the outset, VIPC receives 25% of the profits from international calls coming into China, retroactive to January 1, 2001.
Dominating Position. VIPC’s strategic partnership with Jiabin effectively aligns the company with some of the largest domestic and international telecoms.
Jiabin has multiple joint-venture and co-operative agreements in place with state-owned China Unicom and China Telecom. Jiabin sells long-distance calling cards under the China Unicom name and extends the company’s reach to cities outside Mainland China’s borders.
Jiabin has assigned to VIPC its assets outside Mainland China and its agreements with telecom giants Q-east, Worldcom, PSI Net, Hong Kong Telecom and Russian Mars Communication Net.
High Growth. Profitable since the initial VOIP development, Jiabin has shown strong growth in the last few years, with revenues rising from just under US$350,000 in 1998 to US$2.6 million in 1999 and US$3.6 million in 2000, with before-tax profits of US$443,000 in 1999 growing to US$608,000 in 2000.
The prospects for continued growth remain high. Combined revenue projections for Jiabin and VIPC indicate major growth and profits in the years ahead. Revenues in excess of US$18 million are projected for the year 2001. By 2003, revenues are expected to reach over US$52 million, with an expected after-tax profit of approximately US$5.6 million.
As one of the first foreign-owned companies to enter China’s vast VOIP market, VIPC Communications Inc. (OTCBB:VPCM) is positioned to emerge as a telecom leader in Mainland China in the years to come, as the company embarks on a major phase of expansion and profitable growth.
DATA Corporate Head
Office 94 Rue de Lausanne CH1202 Geneva, Switzerland Contact: Mr. Michael
Harrop E-mail: firstname.lastname@example.org Operations Head
Office No.1 Bei Jiao Chang Hou
St. Chengdu, China Contact: Mr. Zhang Lebing E-mail: email@example.com Investor
Relations Charter Hill Investments Contact: Gene Greenwood North American Toll Free
Corporate Head Office
94 Rue de Lausanne
CH1202 Geneva, Switzerland
Contact: Mr. Michael Harrop
Operations Head Office
No.1 Bei Jiao Chang Hou St.
Contact: Mr. Zhang Lebing
Charter Hill Investments
Contact: Gene Greenwood
North American Toll Free 1-866-427-7303
VIPC is moving quickly and aggressively to capture a significant portion of China’s estimated $6 billion international telephone call market
VIPC’s strategic partner, Chengdu Jiabin Electronic Co. Ltd. (Jiabin) is a leading provider of Internet access and VOIP headquartered in the city of Chengdu, Sichuan Province, PRC. Originally founded in 1992 as a personal computer sales and services company, Jiabin expanded into Russia in 1995 with the first Chinese-Russian wireless paging system. The same year, Jiabin was granted a license to operate a cross-province e-mail service in Mainland China. In 1997, the company was licensed as an Internet Service Provider (ISP) by the IT Ministry of China. Through agreements with China Telecom and China Unicom, Jiabin become the first ISP to offer VOIP Telephony service, operating in eight cities in 1999.
In September 2000, the company began to build its worldwide integrated VOIP network and was awarded a license to operate long distance VOIP in St. Petersburg and Moscow. Profits to date from its highly successful VOIP ventures have allowed Jiabin to emerge as the lowest cost dial-up ISP in Mainland China and a key player in the development of ADSL broadband access and China’s first Telemedicine network.
Under the recent agreement signed between VIPC and Jiabin, VIPC has the option to convert its loan to Jiabin into 100% ownership of the company. This is significant as China’s entry into the World Trade Organization requires that the country begin to deregulate its telecommunications sector and open the industry to foreign ownership.
With an anticipated equity financing of up to US$7 million to immediately expand their integrated network, both VIPC and Jiabin expect to be profitable in 2001. Rapid growth in call traffic is expected to result in economies of scale and dramatically increase profitability.
2001 2002 2003
Call Traffic (Minutes) 75,570,000 174,240,000 249,100,000
Call Traffic (Revenues US$) $15,000,000 $34,500,000 $42,000,000
Gross Profit (US$) $3,599,000 $7,937,000 $8,782,000
Gross Profit Margin 24.0% 23.0% 20.9%
Estimated Net Profit (After Tax) $851,025 $2,579,010 $2,484,825
Estimated Profit Per Share $.041 $.112 $.108
Disclaimer: This material is being provided by microcapmarkets, an electronic newsletter paid for publishing the information contained in this report. microcapmarkets has been paid a consideration of $20,000 (US) by a third party as payment for the publication of the information contained in this report. The information contained in this publication is for informational purposes only, and not to be construed as an offer to sell or solicitation of an offer to buy any security. Please be advised that VIPC COMMUNICATIONS securities may not be available for sale to persons in certain states where VIPC COMMUNICATIONS is not licensed to sell securities. microcapmarkets makes no representation or warrant relating to the validity of the facts presented nor does microcapmarkets represent or warrant that all material facts necessary to make an investment decision are presented above. All statements of opinions are those of microcapmarkets. microcapmarkets relies exclusively on information gathered from public filings on featured companies, as well as, in certain circumstances, interviews conducted by microcapmarkets of management of featured companies. Investors should not rely solely on the information contained in this publication. Rather, investors should use the information contained in this publication as a starting point for conducting additional research on the featured companies in order to allow the investor to form his or her own opinion regarding the featured companies. Factual statements contained in this publication are made as of the date stated and they are subject to change without notice. microcapmarkets is not a registered investment adviser, broker or a dealer. Investment in the companies reviewed is speculative and extremely high-risk and may result in the loss of some or all of any investment made in VIPC COMMUNICATIONS Projections of future financial results are provided solely by VIPC COMMUNICATIONS No assurances are given that VIPC COMMUNICATIONS will achieve said projections. This publication contains forward-looking statements that are subject to risk and uncertainties that could cause results to differ materially from those set forth in the forward-looking statements. These forward-looking statements represent the judgment of VIPC COMMUNICATIONS as of the date of this publication. VIPC COMMUNICATIONS disclaims any intent or obligation to update these forward-looking statements.