Navigating Change....
The PELORUS Group
Market Research and Consulting Services

FOR IMMEDIATE RELEASE

$11 BILLION IN PREPAID TELECOM REVENUES BY 2003!

                                  Date: April 6, 1999
                                  Contact: Greggory S. Blundell
                                  Phone: 908-707-1121
                                  Fax: 908-707-1135
                                  E-mail: info@pelorus-group.com

Raritan, NJ - A new report from The PELORUS Group entitled "Prepaid Telecommunication Services" characterizes prepaid telecom as a hotbed of opportunity. Each component of prepaid telecom - prepaid calling cards, prepaid wireless, prepaid wireline, and prepaid Internet telephony - has a story of remarkable potential. But that story is changing. In 1998, prepaid telecom revenues totaled $2.8 billion. Calling cards accounted for over half (53%) of prepaid revenues. By 2003, they will provide less than a third of the market’s revenues. Concurrently, prepaid wireline will shift from just 4% of the total to 32%. The changes don’t stop there. Prepaid wireless and prepaid Internet telephony are also ready to redefine their parameters.

From 1993 revenues of less than $300 million, the total prepaid telecommunications market had leapt ten-fold to nearly $3 billion by the close of 1998. After a slow start, prepaid calling cards expanded beyond niche markets. Today, they appeal to a variety of markets including college students, travelers, people on the move, businesses, and charitable organizations. Although also initially slow to take off, prepaid wireless, which includes cellular and paging services, is expected to grow significantly. Prepaid wireline, which was not even a product offering just a couple of years ago, is expected to grow as much as prepaid calling cards, but in a shorter timeframe. Prepaid wireline is comprised of prepaid dialtone and prepaid long distance. Already prepaid wireline has been growing at a rate of about 30 percent per month, with an average revenue of $50 per month per customer. Prepaid Internet telephony, with improved voice quality now truly a cost effective alternative to long distance service, will also enjoy strong growth.

Non-traditional providers - the upstarts, the ISPs, the resellers, and CLECs - have lured customers away from traditional providers. If these mainstream companies wish to retain their customer base and grow revenues, then they must act soon to stem the seepage - before it erupts into a flood.

In 1998, prepaid services generated $2.84 billion. Prepaid calling cards contributed $1.52 billion, prepaid wireless $1.19 billion, prepaid wireline $100 million, and prepaid telephony $30 million. The report projects strong growth for each component through 2003.