TSX: PHD Michael Vazquez, President and COO Gary Clifford, Chairman and CEO Investor Presentation Fall 2013
A multi branded Global Communications Company A multi branded Global Communications Company
Disclaimer This presentation contains forward-looking statements, which may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. These statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. Phonetime’s actual results could differ materially from those currently anticipated due to a number of factors set forth in reports and other documents filed by the Company with Canadian securities regulatory authorities from time to time. 3
Customers Customers Reliable Effective Professional A leading global supplier of communication services A leading global supplier of communication services 4
Primary Competitors Primary Competitors Numerous small competitors Numerous small competitors
Management Management • Gary Clifford – Chairman and Chief Executive Officer • 10 years telecommunications experience • Seasoned operator and M&A specialist • Mike Vazquez – President, Phonetime • 20 years telecommunications experience • Seasoned operator, network and IT specialist • Ali Guven Kivilcim – President of Tellza Technologies • 20 years of telecommunications experience • Network, IT and Software specialist • Alec Gramont – General Manager, Route Dynamix • 15 years telecommunications experience • International business experience with both start ups and within corporate environments • MBA in International Business and Finance • Ruddy McGlashan – General Manager, GoLifeTel • 3o years telecommunications experience • International business experience with both start ups and within corporate environments • Seasoned operator, network and IT specialist Seasoned Management Team Seasoned Management Team
Financials Financials [amounts in thousands of U.S. dollars, except per share information] For the three and six months ended June 30 2013 2012 2013 2012 $ $ $ $ Unaudited Unaudited Unaudited Unaudited Revenue 39,792 24,542 73,842 48,185 Cost of revenue 37,403 22,798 69,833 44,532 Gross margin 2,389 1,744 4,009 3,653 Operating expenses 1,037 1,094 1,913 2,366 EBITDA 1,352 650 2,096 1,287 Net and comprehensive income for the period 804 280 1,208 600 EPS - basic and diluted 0.01 0.00 0.01 0.00 Weighted-average number of common shares outstanding - basic and diluted 151,231,492 158,731,492 151,231,492 158,731,492 As at June 30, March 31, December 31, 2013 2013 2012 $ $ $ Unaudited Unaudited Unaudited Cash 2,739 1,230 2,288 Total current assets 13,609 11,912 9,900 Total Assets 24,792 23,613 21,794 Bank Debt — — — Total Debt — — — Total current liabilities 12,267 11,846 10,383 Total liabilities 12,402 12,040 10,638 Total shareholders' equity 12,390 11,573 11,156 24,792 23,613 21,794 Financial strength growing Financial strength growing
Stock Price History Stock Price History Value recognition started; valuation multiple remains low Value recognition started; valuation multiple remains low
A Global Carrier to Carrier Service Provider for voice services A Global Carrier to Carrier Service Provider for voice services
• Phonetime is a global leader of international telecommunications services: • Its highlights include: • Has a current annual run rate revenue of $150 Million compared to 2012 revenue of $102 Million. • Net Income profitable since 2011 • Provides 4 billion minutes of communication annually • Averages 60 million phone calls per month • Utilizes a powerful proprietary software-based Procurement Engine • Has an experienced team of traders of minutes • Is lead by an seasoned management team • Boasts over 1000 commercial agreements worldwide and over 500 active billing customers
The SMS Initiative: Established July 2013 A Global Carrier to Carrier Service Provider for SMS Services A Global Carrier to Carrier Service Provider for SMS Services
The SMS Space • Tellza Group to take advantage of significant opportunities in the SMS Market through a new Group Company called: Route Dynamix • Global Market Volume: about 10 trillion SMS messages in 2012 • Worldwide SMS revenue in 2013 north of $150 billion for the first time • SMS is the most widespread digital communications platform to date and is still growing. The Cisco Visual Networking Index (VNI) Service Adoption Forecast predicts that 90% of global mobile subscribers will be using SMS by 2016, up from 74% in 2011 • SMS is an incredibly powerful communications medium. Text messages can be sent even with a very low-strength cell signal or a congested network. SMS is asynchronous, inexpensive and predictably priced, and works on any handset. In much of the world, SMS is often the only digital data that works, or works reliably Value creation opportunity within existing supply chain Value creation opportunity within existing supply chain 9/20/2013 Proprietary & Confidential - Phonetime Netowrks, Inc. 12
Window of Opportunity • Window of opportunity is NOW as OTT Messaging is spreading but SMS is still “king” and will continue to be for some time • OTT taking over more significantly in US and Europe. Latam, Asia, and Africa will still represent considerable revenue opportunities • MNO’s (our customers) are focusing on SMS intently; according to Ovum Research, MNO’s will lose $23bn in mobile messaging revenue in 2012, as they lose customers to IP-based (OTT) social messaging services • SMS is very profitable; according to PORTIO Research, SMS messaging brings in $1,000 for every MB of data transmitted compared with 2 to 13 cents per MB that comes in from a wireless Internet data plan • Platform selected and purchased • Customizations and testing underway • Traffic and revenue by the of 2013 SMS: Low risk high revenue and margin opportunity SMS: Low risk high revenue and margin opportunity 9/20/2013 Proprietary & Confidential - Phonetime Netowrks, Inc. 13 Over-the-Top (OTT) messaging v SMS
By the Numbers Message Trend OTT messages SMS messages MMS messages 2011 3,492 billion 7,844 billion 207 billion 2012 5,846 billion 8,600 billion 228 billion 2016 20,293 billion 9,554 billion 277 billion Messaging has the potential to outpace voice business Messaging has the potential to outpace voice business 9/20/2013 Proprietary & Confidential - Phonetime Netowrks, Inc. 14
The Mobile Initiative Established : August 2013 Mobile technology has become an extension of us Mobile technology has become an extension of us
Business Concept GoLifeTel is seeking to become a Mobile Virtual Network Operator (“MVNO”) that will sell cell phones based on prepaid discount wireless airtime plans with a variety of comprehensive talk, text and data services for use in Domestic US. We are also seeking status to become a service provider to “Lifeline Program”. 16
The Life Line Program The U.S. Government is providing free cell phones and free plans to low-income families across America. A little-publicized program from the Reagan era that has been providing low-income households with free or subsidized phone services for more than 25 years has recently begun offering free cell phones and plans in lieu of a land line. The program is known as Lifeline”, and anyone with an income at or below 135% of the federal poverty guideline can qualify. For a family of three, that means an income of around $26,000 or less qualifies for a free cell phone. The person next to you might be on a free phone plan. Lifeline is providing free cell phones in lieu of land lines because of the costs and cumbersome regulations governing traditional copper networks across America. Essentially, it costs more to provide land line services than it does to provide a free cell phone and free plan. The way it works is relatively straightforward. Carriers receive a flat payment of $10 per month for each family, which covers the cost of one basic phone and plan. There are no connection fees, installation charges, or wires to be installed, so the end result is a less expensive service with greater coverage and portability. 17
Industry Analysis • As of May 2012, the US wireless industry is valued at $195.5 billion dollars, ranking it amongst the top industries in the nation • In the US Market, prepaid wireless service is the fastest growing service segment in the wireless industry • By 2015 prepaid is expected to be 55% of market at 182M users, meaning 82M users will be migrating to prepaid in the next 3-4 years • Compared to Europe and the rest of the world, the US is behind in adopting this new trend of prepaid packages 18
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