Teliphone Corp Acquires the New York Telecom Exchange Inc. Assets and Operations for $5 Million in Stock
Date :01/11/2012 @ 8:00AM
Teliphone Corp (OTCQB:TLPH) the world's local digital telecommunications company is pleased to announce that it has signed a definitive agreement for the acquisition of all the operations, technology and intellectual property of the New York Telecom Exchange Inc. (NYTEX), the world's first neutral international telecommunications commodity exchange for USD $5 million in an all stock transaction. New York Telecom Exchange Inc will receive a total of 20 million Teliphone common shares at $0.25/share.
NYTEX will operate as a separate division within Teliphone and at current volumes could contribute over $25 million in annual revenue bringing Teliphone's total annual run rate revenue to approximately $31 million.
The exchange will continue to operate under the name "The New York Telecom Exchange" (NYTEX). The transaction includes all world wide operations and infrastructure of NYTEX including NYTEX's UK London data center (LondonTelex) and its European data center in Belgium (EuroTelex).
In 2011 approximately 200 million minutes were bought and sold on the NYTEX platform with a value of approximately 30 million dollars (bought and sold). In December 2011 NYTEX reached 32 million minutes bought and sold for a value of approximately 4.4 million dollars.
Lawry Trevor-Deutsch, President and CEO of Teliphone stated, "We believe that the acquisition of NYTEX's operations by Teliphone is a natural fit for the company and will bring very good value to shareholders through the synergy of being able to provide both wholesale and retail telecommunications operations to our clients and by reducing costs through shared overhead."
NYTEX was launched in June 2009 and uses a proprietary algorithm which commoditizes international telecommunications minutes. NYTEX also developed the concept of trading of blocks of minutes and when used in conjunction with the algorithm allows minutes to be traded like any other commodity as in other mercantile exchanges. NYTEX provides a trading platform for wholesale carriers, mobile and fixed network operators and retail operators and acts as the central clearing house to all exchange-traded transactions therefore ensuring the delivery and fulfillment of these transactions. NYTEX has a number of proprietary value added features such as an integrated US Dollar and Euro trading floors which eliminates currency risk, an anti-false answer supervision system and tTrader, a direct trading option. With data centers in Montreal (NYTEX), London (LondonTelex) and Brussels (Europe Telecom Exchange), NYTEX aims to create a new economy based on telecommunications trading.
TeliPhone Corp. is the world's local digital telecommunications company providing Internet, voice, IPTV, digital content and data services to business, government and residential customers. Teliphone operates a Canadian coast to coast network with its own national infrastructure and its voice and IPTV services are also available in 47 countries. TeliPhone is able to deliver more value added services to its customers at a lower cost than other suppliers.
CONTACT: Lawry Trevor-Deutsch
President, Teliphone Corp.
Tel: +1 514 313 6000
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8331814 share Structure : OS: 41,360,745
The New York Telecom Exchange, Inc. (NYTEX)'s mission is to organize the world's 400 billion minutes of international telecommunications traffic through the provision of a constant market valuation of each minute based on its terminating location.
Telecoms online stock exchange Nytex launched officially at ITW. It is designed as an independent clearing house for voice minutes,
acting as an online stock exchange that sets market prices for minutes across any route in the world based on supply and demand at a
reference quality. And while the exchange has been greeted with some scepticism by some old hands, its CEO Lawry Trevor-Deutsch
could not have been more pleased with the reception it received at ITW. "It's exceeded our expectations," he said. "We thought if we could
sign up a couple of dozen customers we'd be thrilled, but we've signed up 70 accounts with another 30 or 40 to come. We've even had
offers to invest in the business."
NYTEX @ Facebook New York Telecom Exchange, Inc | Facebook
Since the first overseas long distance call more than a hundred years ago, the industry has relied on bilateral agreements between network operators and international carriers in order to set prices for each terminating minute of international long distance traded between Network Operators, In-Country PTT's and Service Providers. The result is different prices for different call qualities between different buyers and sellers providing hundreds if not thousands of different prices for call termination to the same unique destination.
The root of these price discrepancies is found in bi-lateral agreements between Network Operators and International Carriers that have been the standard for setting prices in the market. This has in turn spawned an entire industry of by-pass routes and gateway operators to provide alternatives to non-carriers for in-country call termination.
This has resulted in extreme market inefficiencies, increasing prices due to hundreds of intermediaries in the demand and supply of an international call- each intermediary introduces a price increase, financing risk, technical risk due to multiple intermediary delivery points reducing call quality while increasing its price.
NYTEX is the new standard to which all destinations will have their price for call termination based on market supply and demand. NYTEX permits the monitoring of price fluctuations based on market forces providing one single reference price, at a reference quality, for each destination.
It is no surprise that commodities such as oil, gold and wheat trade globally on internationally recognized commodity exchanges that permit buyers and sellers to exchange them with accurate knowledge of price and market fluctuations within a neutral, financially secure and stable exchange such as the New York Mercantile Exchange (NYMEX)TM.
A minute of call termination is as much a nation's commodity as its wealth of precious minerals and oil- its demand and supply can be predicted due to such factors as population growth and phone penetration rates amongst the population. As demand for termination of call minutes increases due to increasing numbers of phone subscribers, supply will follow as Network Operators will expand their networks to accommodate this growth. New Network Operators will purchase licenses from countries in order to operate their services within the country- these elements will all contribute to increasing demand to reach people within the country, and their respective demands to reach people outside of their country.
Supply issues, much like with that of oil, also exist- as the country permits additional Carriers and gateway operators to operate in their country, supply of termination in that country will increase- just as major network outages will cause sudden decreases in supply- markets react and prices rise and fall.
The population of a country owns their call termination resource and entrust their governments to maximize the value of this resource and manage it as best as possible to the benefit of the population. International call termination becomes a predictable resource that governments can in turn utilize to finance their budgets through adequate taxation to carriers terminating in their country. NYTEX provides a neutral place for them to reference the real value of their resource and to sell those resources on the exchange within a safe, secure and internationally recognized framework.
How NYTEX works:
Fluctuating market prices- the BID and ASK
To date, trading of telecommunications minutes has occurred when a buyer and a seller collectively agree on a price and quality specification between them and when both conditions of price and quality are met, the minutes flow through each trading partner. A change in price from the seller, for example, occurs through communication of rate amendments to the buyer, in which case, if approved, the price will change as per the new amendment. However, during this process the quality of the seller's route may decrease to a point unacceptable to the buyer, traffic is routed away or worse, traffic is blocked due to a technical problem at the seller resulting in dropped and poor quality calls.
NYTEX, through its advanced routing systems, monitors call quality and immediately updates and modifies call routings between buyers and sellers in order to maintain target qualities- should call reference quality cease to be delivered from a seller, for example, NYTEX will route the buyer's calls on a blending of additional routes such that the buyer maintains the reference quality. The blending of routes creates a change to the trading price, and if this price is above that of the buyer's BID, then the traffic is shut off, and the buyer is notified that they must increase their BID in order for traffic to continue to flow.
The same concept works on the Seller's side- if other sellers enter the market and are offering adequate quality at a lower price, the seller will see their traffic reduce and will be asked to update their ASK price should they wish to continue to transit traffic on their route.
The Spot Market and the Block Trade
Buyers and Sellers can trade on either the Spot market, or may conduct block (fixed price) trades.
As in the examples provided above, the market price fluctuates and as long as the market price is below that of a buyer's BID, or above that of a Seller's ASK, then traffic will flow. NYTEX clearing calculates a settlement based on minutes bought and sold at the market price and either debits or credits the buyers and sellers accounts with both minutes delivered / purchased and funds collected / spent. This is known as the NYTEX Spot Market and represents the flow of minutes at changing prices.
Note that on the Spot Market, buyers and sellers transact minutes and funds at the market price, and hence, if there is a decrease in the market price and call traffic still flows between buyer and seller due to adequate BID and ASK floors and ceilings, their respective accounts are debited at the market price and not at their respective BID and ASK price. This, known sometimes as a "Price Improvement", is always to the benefit of the trading partners and not the exchange.
NYTEX introduces the concept of the Block trade, that is, a fixed volume of minutes (always at the reference quality) at a fixed price. Once a block trade is consummated between a buyer and a seller, all minutes in the block are delivered at the Block trade settlement price irrespective of the market price.
Telecommunications Technology at the heart of NYTEX
NYTEX utilizes best of breed software, hardware, routing technologies and algorithms in order to ensure that minutes purchased and delivered occur at the reference quality for each destination market. Buyers and Sellers can feel confident in the capacity, redundancies and robustness of the NYTEX platform to deliver their trades on a timely basis. (Technology Partnerships- Quintum, Cisco, etc…)
Corporate Partner: Cambridge Mercantile Group
Cambridge Mercantile Group provides foreign currency exchange services in over 130 global markets including purchase, sales forward contracts , foreign currency drafts and electronic and wire transfers. For over 10 years, with offices located in Canada, the United States and the United Kingdom.
January 11, 2011: New York Telecom Exchange Inc. (NYTEX) Launches tTrader™
The Smart Way to Exchange Traffic Directly http://www.nytexus.com/media.html
Nytex aims to be an independent clearing house for voice minutes, acting as an online stock exchange that sets market prices for minutes
across any route in the world based on supply and demand at a reference quality. The market price will fluctuate due to market forces such
as cable cuts or new competition entering a particular country market, but it will be available to all rather than negotiated among the few. In
four months of beta testing, carriers have traded 100 million minutes across its platform, Nytex says, and two major European carriers are
early customers on the live exchange.
Nytex has devised an algorithm that creates the market price by blending all supply routes to individual destinations. The algorithm
automatically directs a buyer's traffic to a destination along the cheapest route that can provide the reference quality. If the amount of traffic
starts to choke the route and quality falls, the algorithm fails over, continuously adjusting the routing to a second or more routes, and the
price naturally drifts higher as demand rises. Prices on the exchange are updated every 60 seconds in response to trading activity. Buyers
put a ceiling on the price they are prepared to pay for termination and all the while the market price remains below this, they have the
opportunity to save money.
There are no upfront fees for joining Nytex - the exchange rolls any clearing fees into the market price - so buyers and sellers can opt in
or out whenever it suits them. In a blended model, buyers don't have visibility of who delivers their traffic but Nytex's Lawry Trevor-Deutsch
maintains that the model "will always come out with a better price and higher quality than a buyer can get from one individual seller". Any
carrier can sell on the exchange as long as they provide the right quality, levelling the playing field for smaller carriers. Trevor-Deutsch says
the losers in the market will be traffic aggregators, whose infrastructure will no longer be needed to transit traffic or to take on the risk of
matching buyers with smaller sellers.
Nytex will benefit from partnering with exchanges that already have interconnection and settlement capabilities rather than having to
build out Epsilon-style pooling points to underpin its trading platform or to take on settlement risk. Many industry watchers believe that the
writing is on the wall for the fee-based model, so having Nytex as a partner, able to provide an alternative trading model, would make sense
for exchanges that want to be at the leading edge. Nytex would also bring to a partner the ability to trade in euros as well as dollars,
hedging against exchange rate fluctuations through Cambridge Mercantile. The hedging is invisible to buyers and sellers but means all
settlements are fixed at the time of trade.
Trevor-Deutsch believes that Nytex will be a disruptive platform in the industry but one that will be a force for good. "A country can go
online in our public exchange and see their communications traffic as a resource that can be traded for cash," he points out. "Once you
equate telco minutes to a commodity, you have a new ability to underwrite it and trade it as a natural resource - this will open up a whole
new opportunity for companies and countries," he says.