Contact Carmel Sofer, CEO
Product Added value services global IP network for roaming subscribers
web site www.starhome.com
Comverse Technology is continuing to send its subsidiaries to Nasdaq and at the moment, the next in line is star*home. In the meantime, Ulticom is already planning a second offering and Comverse Ifosys will be issued on Wall Street shortly.
Star*home’s IPO is planned for the first half of 2001. Company CEO Carmel Sofer refuses to disclose the amount he plans to raise and the company value at which the IPO will take place. “We’re planning to issue only after we see significant content in the company’s activity,” Sofer stresses.
Star*home’s network started operating a week ago, providing services through five cellular operators in Europe. Another eight European cellular operators will be added in the next few weeks.
”Globes”: What’s the policy regarding company options?
Sofer: “Every employee, including our secretary, has ordinary company options.”
What percentage of the company are you planning to issue?
”It hasn’t been concluded yet.”
How are you planning to utilize the money raised?
”It has not yet been discussed. We’ll know more as the issue date approaches.”
The capital market claims that in the next few months only companies enjoying hype, with sales and profits, will hold IPOs for significant sums. Cellular applications companies are continuing to benefit from all the hype, but the current wave is liable to fade soon. Aren’t you anxious about issuing at such a time?
“I can assure you we won’t go public until we have proven business, including revenues. We’re not looking for hype in order to issue. Moreover, Comverse companies have a solid reputation on the market.”
Star*home has developed enhanced services for the mobile phone for international travelers. “A user in a strange country needs different services than someone in his natural environment,” Sofer explains.
The company was founded in 1998 by Comverse Technology, after it identified a vacant niche. Star*home customers are cellular operators, but its revenues come mainly from end subscribers’ usage. Most of the revenue is expected to come from business people stationed overseas, but some revenue is also expected from vacationers.
Why would mobile companies want to pay for your services?
”Mobile companies are not as familiar with their customers’ needs as we are. They don’t know which services are required during an overseas stay. The cellular companies in the foreign countries know even less about these customers’ needs. Our service will lead to increased use of the mobile phone, even when the owners are overseas and will raise their revenues.
”We will shortly launch a new service named “word by number”, which will enable the traveler to reach his destination by clicking on the first five letters of the service required. For example, if he wants to hire a car, he presses in the word “Avis” or “Hertz” and the system knows how to dial the relevant telephone number in each country for him.
”Some travelers prefer to receive some services directly from their country of origin. After dialing the destination name, he is connected to the relevant service center. If an Israeli traveler dials the word “Visa”, for example, he will reach the Visa center in Israel and receive service in Hebrew.
“For emergency services, the traveler dials the number he is used to in his country of origin. The system is capable of translating this to the relevant numbers in the host country. For example, an Israeli dialing 100 in France will reach the French police.”
Are there any difference in the services for people coming from different countries?
“Certainly. For example, a British traveler would not be interested in kosher restaurants in Paris, so we adapted services for population segments according to preferences.”
Do you have a presence in the US?
“We have one center in Boston, but most of our activity is currently in Europe.”
What is your revenue model?
“Mobile operators pay a one-time connection license fee, after which we receive payment from them for every time their end subscribers use the service.”
Capital market estimates give star*home a market value of only a few hundred million dollars, but the bottom line is that the company value will be determined according to its revenues. The main question, therefore, is how to make money out of it.
“I don’t envisage mobile operators paying several hundred thousand dollars for the license, plus a dollar for each usage,” a capital market source says. “On the other hand, if the price of the license is only a few thousand dollars and royalties are several cents, I can’t see where revenues will come from.”
How much will you receive for the license and what level of royalties will you charge for usage?
“I can’t divulge the license price, particularly since it differs from service to service. However, I can assure you it will be more than a few thousand dollars. In the meantime, we’ve already signed a number of deals and several more in the pipeline are about to be signed. The payment per transaction will not reach one dollar.”
Do you have an assessment of the revenues from the deals already signed?
“We’ll have the answer only in the fourth quarter. Regarding license sales, we sold some companies expensive licenses and others cheaper licenses, depending on the type of deal and number of services the mobile operator purchased.”
Are you in the services or infrastructure category?
“We can be both in the category of network connecting companies and service providers. In principle, star*home leans more to service provision, but our product has elements of infrastructure. We build the network connecting to the mobile network and deploy access servers around the world connecting the mobile network to our IP network. Our equipment includes hardware and software, both developed by star*home and other Comverse subsidiaries, such as recently acquired Gaya Software Industries.”
Does Comverse plan to sell star*home after the IPO?
“It is too early to say, but I know of no Comverse plan to sell the company.”
What is the deals forecast for the coming years?
“Our network started operating a week ago, providing services through five cellular operators in Europe. Another eight European cellular operators will be added in the next few weeks. We’re currently in the process of obtaining permits and I believe we’ll launch operations in the next few weeks.
“At the moment we have 20 access servers in 14 countries, five of which are already connected to mobile operators. By year-end, we’ll add another 20 operators to our network. In 2001, another 35 are planned, and in 2002, another 100.”
Have you checked how many people will be willing to pay for the service?
“We’re optimistic. During the trial service stage, demand exceeded expectations.”
Is it necessary to buy a special telephone in order to use the service?
“No. The service can be provided through existing telephones.”
Aren’t you afraid that communications infrastructure giants will set up companies and trample you down?
“I’ve no doubt that we will have competitors, but I believe we have several advantages. Firstly, star*home benefits from Comverse cooperation agreements with 350 cellular providers worldwide. Secondly, we built the service around international travelers. It takes time to analyze their requirements, and we’re very much ahead of the others.”
Has any company already attempted to enter your field?
”I’m not aware of any.”
Are you contemplating cooperation with other companies developing added value services?
“We’re planning to open up the network to companies developing attractive added value services which are interested in providing them through us. An agreement with us would save them the lengthy process of creating cooperation agreements with cellular operators.”
Product: Global IP network for mobile operators
Market: Mobile phone operators
Customers: 350 Comverse Technology customers
Ownership: Comverse Technology
Published by Israel's Business Arena on 11 September, 2000