Equalnet to Offer Free Long Distance, Telecommunications Advertisers to Pay Costs; Subscribers Acquired by Internet/Network Marketing
HOUSTON--(BUSINESS WIRE)--Feb. 26, 1999--Equalnet Communications Corp. (NASDAQ: ENET) Friday announced it has signed a letter of intent to acquire The Intelesis Group Inc., a development stage company located in Miami, that has pioneered technology for advertiser sponsored long distance telecommunication services.
FreeCaller(TM), the name of the new service, as well as the patent pending technology which supports the service, is designed to provide residential subscribers with one expressly selected 30-second advertising message at the beginning of each of their long distance telephone calls; calls lasting up to five minutes are then free. Intelesis plans to launch its service in the next 90 days and has had no revenues to date.
Equalnet will exchange 2.5 million common shares for all of the assets of Intelesis, including the above referenced software. Additionally, holders of both common and preferred shares of Intelesis may receive additional Equalnet common equity based on the performance of FreeCaller(TM) in the future.
"This is an exciting new paradigm for the long distance business," said Mitchell H. Bodian, Equalnet's president and chief executive officer. "Telephony is the only electronic communications medium not advertiser supported today. Radio, television, even the Internet, all depend on advertising as a major source of revenue. Telephony just developed according to a different model. We believe that there are numerous population segments that would welcome free long distance calls in exchange for listening to targeted advertising messages. Preliminary responses also indicate that many advertisers and their agencies believe FreeCaller(TM) is a great way to reach precisely targeted demographic groups, and provides an attractive and valuable alternative to more traditional media such as direct mail. FreeCaller's pinpoint targeting and interactive capabilities collapse the distance between advertisers and their customers."
Consumers who wish to subscribe for free long distance telephone service from FreeCaller(TM) are required to complete a simple but extensive demographic survey for all the telephone users in the household and select Equalnet as their residential long distance company. The advertiser pays for the first five minutes of the user's long distance call in exchange for the consumer listening to a 30 second message from the advertiser before the call's completion. The ad played is specifically chosen by the FreeCaller(TM) system based on the unique demographic profile analysis conducted by FreeCaller's proprietary software programs.
"FreeCaller(TM) provides Equalnet with the opportunity to both refocus and reinvent itself with this innovative strategy," said Mark Willis, Equalnet's chairman. "We believe that FreeCaller(TM) will be the exciting growth engine that helps reposition Equalnet in a unique telecom market niche."
According to Bill Rhodes, Equalnet's newly appointed chief operating officer, "Equalnet has the infrastructure in place to support a successful launch of FreeCaller(TM), as well as continue to provide the backbone for what I believe will be significant subscriber growth."
Equalnet disclosed that FreeCaller(TM) will be marketed under several brand names through, among others, its wholly owned network marketing subsidiary, ACMI, as well as via Intelesis' recently created agent network. Subscribers will have the ability to enroll by telephone, mail and the Internet. Advertising sales will continue to be the responsibility of Intelesis management, who have extensive experience in alternative media marketing. Equalnet added that it may make the system available to other companies and affinity groups on a licensed basis.
This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended. All statements other than statements of historical fact, included in this news release, including without limitation, Equalnet's business strategy, plans and objectives, are forward-looking statements. Although Equalnet believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectation will prove to be correct. Numerous factors could cause actual results to differ materially from Equalnet's expectations, including without limitation, general economic and competitive factors. Additional risk factors are discussed in Equalnet's Annual Report on Form 10-K for the year ended June 30, 1998, which is on file with the Securities and Exchange Commission. Readers should carefully review the cautionary statements and risk factors described in documents filed by Equalnet from time to time with the Securities and Exchange Commission.
Equalnet Communications Corp., Houston
Mitchell H. Bodian
Shaunna Jones (investor relations), 281/529-4611
KEYWORD: TEXAS FLORIDA
BW0158 FEB 26,1999