TELECOM COMMUNICATIONS (TCOM)

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TELECOM COMMUNICATIONS DUE DILIGENCE PAGE

TELECOM COMMUNICATIONS (TCOM)


Company website

http://en.icchina.com/

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ABOUT TELECOM COMMUNICATIONS


Telecom Communications (TCOM) recently acquired Arran Services Limited, which effectively gives the company control of IC China Star East MMS. Shares of TCOM closed Friday at $1.02 per share and with approximately 36.2 million shares outstanding, the market cap comes out to $36.9 million. For the first eight months of this year, Arran has generated about $7.8 million in sales with $780,000 in net income. TCOM projects annual sales to exceed $12 million for the year. We will talk more about valuation in the next section. Let's see what the company's actually does.

IC Star East MMS Ltd. (http://www.ICChina.com) was established in December 1991. The company has contracted with more than 2000 websites and collected all of their Internet and mobile phone users to be the online/offline members. ICChina.com links entertainment and life style information to local communities across China. This website is the largest local content affiliates website in China. The possibilities here are huge as China is the single largest mobile communications market in the world with more than 250 million mobile phone users and 10 billion short messages transmitted per month.

Valuation Time

Netease, Sina, and Sohu are all sitting on billion dollar market caps after the spectacular run in Chinese internet stocks. TCOM on the other hand is worth only a fraction of the three with a market cap of $36.9 million.

According to a press release issued by TCOM on September 25, the company estimates 2003 revenues to be $12 million. For the first eight months in 2003, the company has generated about $7.8 million in sales with $0.78 million in net income. We don't know how well this fourth quarter has been for TCOM but if we assume that it was similar to the first eight months then 2003 year end profit should be in the area of $1.17 million. That would come out to approximately $0.03 earnings per share.

From a price to sales metric, TCOM is trading at a little over 3.017 times sales this is a significant discount to the group. On the earnings front, a P/E ratio of 31.56 is also under the three major Chinese portals. There is a catch-22 when it comes to being a smaller company. You are often not granted the premium that the sector leaders enjoy and in this case the valuation metrics given to Netease, Sina, and Sohu. However, economies of scale will make it easier for TCOM to grow revenues at a faster pace.

Out of the four companies in the two images above, TCOM has the lowest valuation based on price to sales and price to earnings ratios. In the last two months IC China Star East has signed some major partnerships. If these new partnerships can translate into more dollars for TCOM, then the upside potential for revenues and earnings could be much higher. The key for TCOM is to consistently put up great numbers and win over investors one at a time.

Big Partnerships

On Dec 5, 2003 Telecom Communications, Inc. announced (press release) that IC Star East MMS, Limited, has entered cooperation with 3721 Inter China Network Software Co. Ltd (www.3721.com), which was recently acquired by Yahoo!, Inc (YHOO). Under the agreement, IC Star East MMS will work with 3721 to develop short messaging service (SMS), multimedia messaging service (MMS), coloring ring back tone service and other wireless contents such as wall paper and gaming. 3721 will provide the technical platform and take part in promoting this new operation to its users that have 30 million keyboard resolutions every day.

This follows a similar mid November announcement where IC Star East entered an agreement to form a more aggressive and closer partnership with 5wan (www.5wan.com). Both companies will launch cooperation in (SMS), (MMS), coloring ring back tone service and other fields based on the celebrity resources of IC Star East. 5wan will provide the technical platform and take part in promoting this new operation. 5wan's products and services are based on WAP, SMS, GPRS, Java and MPEG4. The company is the first software developer to pass the Ericsson GPRS test. Ericsson (ERICY) has already used 5wan's game software into its application integration, recommended formally by China Mobile (CHL).

The company's management team has shown it can close deals with large conglomerates. We look forward to seeing more of these types of partnerships in the future. Perhaps a few more high profile announcements like the one with Yahoo will increase interest in TCOM.

Conclusion

Shares of TCOM spiked to a high of $2.64 per share in late October. Since then the shares have retraced 61.3% to close Friday at $1.02 per share. The stock is currently trading at the $0.98-$1.03 support level with the next line of support at $0.91. There should be little resistance until the $1.20-$1.30 levels. There is very little resistance past these levels until $1.62.

We were initially going to issue a trading alert on TCOM because of the Yahoo announcement. Chances are the company will see heavy action tomorrow due to this new deal. However, if you look at Netease, Sina, and Sohu the biggest gains came from those that owned the stock for over two years. This doesn't mean that TCOM will take that long to play out but it may. This is a company that should be viewed with a long term horizon. China is growing like gangbusters and there is still a ways to go until the expansion tapers off.

We do think that if TCOM can grow revenues and remain profitable then eventually the valuation gap will lessen. The company will never be given the type of multiple granted to the big three and that's not a bad thing. The bottom line is that all four companies are doing a majority of their business in China. There are not many Chinese internet companies that haven't already locked in out of this world gains. TCOM represents an opportunity to play China at a valuation multiple much less than Netease, Sina, or Sohu.

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PRESS RELEASES

Telecom Communications Inc. Signs Letter of Intent to Acquire Jing Ying Services Limited With $7 Million Revenue Forecast in 2004
Monday May 10, 7:43 am ET
Jing Ying Services Ltd. Reports sales of $4.18 million with $1.7 million in net income in 2003


NEW YORK, May 10 /PRNewswire-FirstCall/-- Telecom Communications, Inc. (OTC Bulletin Board: TCOM - News) today announced signing a Letter of Intent to acquire Jing Ying Services Ltd. Telecom Communications plans to acquire 100% of the common stock of Jing Ying in exchange for $4 million in restricted TCOM preferred shares. Jing Ying Services Ltd. will become an integral part of the Telecom Communication's Multimedia Message Service strategy by combining with IC Star MMS, Inc. (ICSTAR), a 100%-owned subsidiary of Telecom Communication. Jing Ying Services Ltd. is currently projecting 2004 revenue of $7 million. ICSTAR and Jing Ying Services combined, project over $10 million in Multimedia Message Service revenue in 2004.

According to unaudited annual financial statements for 2003, Jing Ying Services Ltd. has generated approximately $4.18 million in sales with $1.7 million in net income, $2 million in total assets with $1.8 million in shareholder equity. Audited financial statements will be announced after the acquisition.

Fred Deng, CEO of Telecom Communications, stated, "Jing Ying is an excellent addition to our Multimedia Message Service strategy, this acquisition is a valid illustration of our overall strategy to acquire companies that expand product line and create cross-selling opportunities in related markets. TCOM will be able to capitalize on Jing Ying's client relationships and vice versa. As we identify these opportunities we anticipate increasing our forecast for TCOM."

Jing Ying Services Limited, (www.JingYingCo.com) is a three years old corporation headquartered in China. The company delivers integrated e- procurement, management, and payroll solutions to individuals and any size company. The Jing Ying Services Framework is a proprietary technology that provides a set of services commonly required for distributed enterprise systems, such as Workflow, Persistence and Authorization. Jing Ying operates one of the largest talent marketplaces on the email system with over 600,000 registered mobile phone users. Jing Ying's clients include 500 SME over greater China.

About TELECOM COMMUNICATIONS, INC.

Telecom Communications Inc. is doing business in China via subsidiaries. IC Star MMS is a China-based local information and services affiliates network. Established in December 1991, IC Star MMS (http://www.ICStarMMS.com) has contracted with more than 2000 websites and collected all of their Internet and mobile phone users to be the online/offline members. ICStarMMS.com is through IC China network links entertainment & lifestyle information to local communities across China. IC Star MMS, which has been created by original Star SMS/MMS called (My Star Friends) community, was first invented in SMS/MMS interactive between Star and fans in the world. Telecom Communications has been working with Aixi Software, Limited (http://www.aixi.net) to develop a software program that is specifically provided to service providers in the wireless messaging services in China. This called SMS/MMS Information Manager System software has generated sales via revenue sharing model with service providers. In Jan 2004, the company has launched SMS/MMS Call Center CRM System (Enterprise version) for the service industry. In the meantime, TCOM, together with Aixi Software, will also launch ICPhone Opt-in Classified List service. This service is specifically designed for the service providers to offer information services software. Telecom Communications is targeting users of mobile devices such as mobile phone, internet and PDA's. The Company has been working together with other local Chinese companies to develop telecommunication value-added service application software and system integration for commercial, industrial, cultural and educational usage.

About JING YING SERVICES, LTD.

Jing Ying delivers integrated e-procurement, management, and payroll solutions. Jing Ying 's flagship product, ProSource, is a hosted, end-to-end application for sourcing, hiring, managing, and payrolling the enterprise-wide contract workforce. With ProSource, corporations can automate the hiring process, speed candidate sourcing and engagement, streamline vendor activity, receive comprehensive business intelligence, consolidate billing, and remain legally compliant with contract workforce regulations. In addition, Jing Ying Services Ltd. operates one of the largest talent marketplaces on the email list system with over 600,000 registered mobile phone users, Jing Ying clients include 500 SME over greater China. Jing Ying is located on the Internet at http://www.jingyingco.com/ and is headquartered in Shanghai with additional offices throughout the China.

Telecom Communications Announces its China Operation Entered Cooperation with Tencent Company, Limited
Tuesday May 11, 10:45 am ET
Targeting 80 Million Chinese Internet IM Users


NEW YORK, May 11 /PRNewswire-FirstCall/ -- Telecom Communications, Inc. (OTC Bulletin Board: TCOM - News) announced today that its China Operation, IC Soft Limited, has entered cooperation with Tencent Company, Limited ( www.QQ.com ), which was recently an ongoing IPO in Hong Kong Exchange. Tencent is one of the first Internet Instant Messaging (IM) software developers in China, and a leading provider for Internet and mobile value-added services with a focus on IM and related value-added services.

Under the agreement, IC Soft will work with Tencent to develop internet entertainment channel, Multimedia Messaging Service (MMS), Coloring Ring Back Tone service and other internet contents. Tencent will provide the technical platform and take part in promoting this new operation to its users that have 80 million Instant Message users.

As a leading Internet company and award-winning service provider (SP) in China, Tencent integrates IM across different platforms such as Internet, mobile and fixed line networks to cater for the communication needs of our users. They constantly innovate and utilize their local knowledge to serve their large user base.

Commenting on the partnership, Mr. Shanhe Yang, Vice President in Product Development said: "We are extremely excited about having partnered with Tencent, the pioneer and market leader for providing Chinese Instant Message Services in China. QQ has established itself as one of the most popular Internet brand in China. The Chinese Instant Message service is one of the most widely used services on the Internet in China, serving over 80 million Instant Message Service users. I believe, by leveraging Tencent's leading status in China's Internet industry and entertainment content that IC Star MMS provides, we are confident this venture will be a very profitable one for our bottom line."

About Telecom Communications Inc.

Telecom Communications Inc. is doing business in China via subsidiaries. IC Star MMS is a China-based local information and services affiliates network. Established in December 1991, IC Star MMS (http://www.ICStarMMS.com) has contracted with more than 2000 websites and collected all of their Internet and mobile phone users to be the online/offline members. ICStarMMS.com is through IC China network links entertainment & lifestyle information to local communities across China. IC Star MMS, which has been created by original Star SMS/MMS called (My Star Friends) community, was first invented in SMS/MMS interactive between Star and fans in the world. Telecom Communications has been working with Aixi Software, Limited (http://www.aixi.net) to develop a software program that is specifically provided to service providers in the wireless messaging services in China. This called SMS/MMS Information Manager System software has generated sales via revenue sharing model with service providers. In Jan 2004, the company has launched SMS/MMS Call Center CRM System (Enterprise version) for the service industry. In the meantime, TCOM, together with Aixi Software, will also launch ICPhone Opt-in Classified List service. This service is specifically designed for the service providers to offer information services software. Telecom Communications is targeting users of mobile devices such as mobile phone, internet and PDA's. The Company has been working together with other local Chinese companies to develop telecommunication value-added service application software and system integration for commercial, industrial, cultural and educational usage.

About Tencent Company Limited

Tencent is one of the first Internet Instant Messaging (IM) software developers in China, and a leading provider for Internet and mobile value- added services with a focus on IM and related value-added services. Tencent was founded in November 1998 in Shenzhen. In February 1999, Tencent launched its first IM software -- "Tencent QQ." Over the past five years, Tencent strived to pursue technological advancement, maintaining a steady high growth in users. The vast community of Tencent QQ users demonstrates Tencent's technology strength in operating massive online application systems and IM- related applications.

Tencent users can communicate real time with each other via our IM platform with their PCs, mobiles and fixed line phones as well as various terminal devices. Not only can users communicate via texts, images, audio, video, and email, but they also have access to various Internet services and mobile value-added services designed to enhance community experience, including mobile games, dating, content downloads and other entertainment services.

Tencent develops its business in three strategic directions, i.e. consumer IM, enterprise IM and Infotainment. Tencent is heading to realize their vision "To become a top Internet enterprise."

Tuesday May 11, 3:00 pm ET


NEW YORK, May 11, 2004 (PRIMEZONE) -- The following is an article written by Maria Esposito, a freelance journalist:
Entertaining the Masses:

Providing multimedia entertainment and lifestyle content to sate a growing world appetite is big business; and nowhere is it becoming bigger business than in China's vast telecom market. This lust for technology goes hand-in-glove with the booming Chinese economy. Zhou Xiaochuan, Governor of the People's Bank of China (PBC), said in a written speech to the International Monetary and Financial Committee, which the Chinese economy experienced sound development in 2003, with gross domestic product (GDP) growing by 9.1 percent over the previous year and per capita GDP reaching US$1,100.

The rise in the standard of living isn't only an urban phenomenon. According to China's National Bureau of Statistics, the per capita cash income of the country's rural residents increased by 97 yuan (US$11.70) to 834 yuan (US$100.50) during the first quarter of this year. Bureau spokesperson Zheng Jingping said that income growth for rural residents has been aided by the efforts of the central government. Initiatives like the ``tax-for-fees'' reform in rural areas have helped reduce the per capita taxes and fee burdens for rural residents; dropping it 2.2 yuan (27 US cents) or 36.3 percent during first quarter 2004 as compared with a year ago. This clearly puts more cash in the hands of Chinese consumers.

And a part of this increased revenue will certainly be earmarked for discretionary spending like entertainment, a fact that has not been lost on the management of Telecom Communications Inc. (OTC BB:TCOM.OB - News). This China-based company does business through its subsidiary:


* IC Star MMS is a China-based local information and services
affiliates network. It has contracted with more than 2000 websites
and gathered all of its Internet and mobile phone users to be the
online/offline members. ICStarMMS.com links entertainment and life
style information to local communities across China, and is its
largest local content affiliates website.

* IC Star MMS has been exclusive contract with StarEastNet,
StarEastNet is one of the first Chinese-language Internet media
companies to provide multimedia entertainment and lifestyle content
to the global Chinese community. They run the largest celebrity
website portal in China, having contracts with more than 160
celebrities in greater China. Currently, StarEastNet produces and
distributes original interactive programming through its network of
vertically integrated entertainment portals. Their objective is to
become the preeminent vertically integrated Internet content
provider and a leading platform providing exclusive, innovative,
and trend-setting entertainment content, products and services in
Asia.

* Telecom Communications, through its subsidiary, has also entered
into strategic partnerships with 21cn.com, the largest Internet
portal provider in the Southern China region and the overall fourth
ranked Internet Portal provider; and with Linktone.com
(NasdaqNM:LTON - News) , the leading provider of both mobile Internet
enabling technology and application services. Another important
outcome of the Linktone.com partnership is that it allows Telecom
Communications to capitalize on the favorable relationships
Linktone.com has established with the main telecom services
providers in China such as China Mobile and China Unicom.
Linktone.com also has extensive experiences in the SMS, WAP and
other value-added services that will assist Telecom Communications
in expanding the line of products/services they offer.

What does all of this mean for Telecom's future? Well, for a company whose goal is to become the premiere provider of innovative and trend-setting entertainment content, products and services, it's already taken the first steps. Telecom has established its own entertainment brand with an in-house pool of recognizable stars, its gained entry into local communities across China through the largest local content affiliates website in the country, and its acquired the means to new technologies to build a more consumer-driven product line. With that kind of a business model in place, the $7.0 million in sales for fiscal 2003 is only the beginning of what Telecom Communications can achieve.

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COMPANY SHARE STRUCTURE

FROM THE MAY 24,2004 FORM 10-QSB

APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 50,188,000 shares of Common Stock, $.001 Par Value Per Share, outstanding as of May 24, 2004

ADDITIONS TO SHARE STRUCTURE

This Post-Effective Amendment No. 1 to Telecom Communication, Inc.'s (the "Company") Registration Statement on Form S-8, Registration No. 333-113598 (the "Registration Statement") filed March 15, 2004, pertaining to the registration of 3,000,000 shares of the Company's Common Stock, par value $.001 per share:

(i) Amends "THE COMPANY" in Item 2 in its entirety as follows:

Telecom was incorporated on January 6, 1997 in the State of Indiana under the corporate name MAS Acquisition XXI Corp. Prior to December 21, 2000, we were a blank check company seeking a business combination with an unidentified business. On December 21, 2000, we acquired Telecom Communications of America, which was a sole proprietorship doing business in Los Angeles, California since August 15, 1995 and changed our name to Telecom Communications, Inc.

On September 30, 2003, Telecom consummated a Stock Purchase Agreement with Arran Services Limited ("Arran") and its sole shareholder, Mr. Fred Chiyuan Deng, for the acquisition of all of the capital stock of Arran, a British Virgin Island corporation. In exchange for the capital interest, Mr. Deng and his designate received a total of 23.8 million shares of Telecom common stock, representing approximately 64% of the outstanding shares of Telecom. On September 30, 2003, Telecom discontinued its operations in the U.S. On the closing of the Stock Purchase Agreement, Mr. Deng was elected chairman and CEO, and Mr. Ou Zhixiong and Ms. Lijian Deng were elected as directors.

On December 31, 2003, Mr. Tak Hiromoto and Ms. Elizabeth Hiromoto resigned as directors and as President and Secretary, respectively. Mr. Deng was appointed as President, while Ms. Deng was appointed as Secretary.

On March 16, 2004, TCOM acquired from Auto Treasure Holdings Limited, an entity 100% owned by Mr. Deng, an additional 20% interest of IC Star MMS Limited ("IC Star") as well as a 100% interest in Huiri Electric (Panyu) Limited ("Huiri") for a consideration of 9,889,000 shares of Telecom common stock and 10,000,000 warrants to purchase 10,000,000 shares of Telecom common stock at $2 per share. As a result, as of March 16, 2004, Telecom owned 100% of IC Star and of Huiri.

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Contact:
Mr. Benny Huang
Telecom Communications, Inc.
[e-mail]
Phone: [phone]