TELECOM COMMUNICATIONS (TCOM)

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Telecom Communications Announces Stockhouse.com
Monday April 25, 3:27 pm ET
- Editorial Covers TCOM: 'Microcap Monday: TCOM in China' By Danny Deadlock

HONG KONG, April 25 /Xinhua-PRNewswire/ -- Telecom Communications, Inc. (OTC Bulletin Board: TCOM - News) the Total Solutions Provider, announced today the release of an independent investor research report published by MicroCap.com on Stockhouse.com.

Following 3 Month Triple Digit Growth, Independent Research Firm Recommends TCOM over SINA, SNDA, and NTES.

A leading publisher of Independent research on microcap stocks, has issued the following research report on TCOM. MicroCap.com has been publishing online since 1995 and their weekly editorial is featured every Monday & Tuesday on the home page of Stockhouse.com, one of the largest investing websites in North America. This new research report comments on the strong growth potential of TCOM with some excellent insight into China.

This report follows our April 21st news release in which we announced quarterly operating statistics for the period ending March 31/05, and reported that the number of new clients using our SEO4Mobile service had grown 526% since Dec 31/04 and new clients for our CRM Virtual Call Center station had also grown by 109% in the same period. Mr. Danny Deadlock, Publisher and Analyst for MicroCap.com, released the report to present the results of his most recent independent investor research on the Internet industry in China and, specifically, Telecom Communications, Inc.

"I believe Mr. Deadlock's research report offers a complete perspective on the current state of the Internet industry and market. This is the most concise explanation of our market I've seen. He is one of the few independent investor analysts covering the telecom and relating industry," said Tim Chen, CEO. "I am pleased to see that Mr. Deadlock has commented favorably regarding our investor's opportunity for stock appreciation. In addition we're complimented by his high regard for the work we continue to do in building a world-class organization."

Features: Microcap Monday: TCOM in China

Monday, April 25, 2005

By Danny Deadlock The report is available at
http://www.stockhouse.ca/shfn/editorial.asp?edtID=17644

Telecom Communications (TCOM/OTC Bulletin Board $0.35)

We've had a few small updates on TCOM (OTC Bulletin Board: TCOM - News) since our initial feature report November 3, 2004 (low $0.40's) but nothing significant since then. By early December the stock had doubled but then, like so many others, it started a correction which has lasted for over 4 months. At the time, we were speculating on the enormous growth potential of China and the cutting edge technology developed by TCOM for the mobile phone market. Regardless of what the share price has done, the company has continued to demonstrate tremendous progress and Thursday released numbers that solidified our reason for following them.

In Q4 2004, the company targeted revenue for 2005 in the range of $10 million U.S. -- for the period ending March 31st they have hit $1.9 million with a 69% increase in net income over Q4/04 to $612k. Not only is it great to see a positive bottom line but at current growth rates, $10 million should be surpassed by the end of 2005. Of particular importance is the numbers they have generated over Q4 in only 3 months.

1. They added 621 small and medium sized businesses to their SEO4Mobile service. SEO4 is a cutting edge technology designed to integrate the internet with mobile phones using search engine technology and a pay per click business model. Once the major search engines like Google and Yahoo incorporated pay per click advertising on the internet, their bottom lines increased dramatically. TCOM, from what we have seen, is the first company to have developed something similar for mobile phone users and advertisers. The success of this technology is proven by the fact it has grown 526% in only 3 months (total now is 739 business users vs. 118 at Dec 31/04). Not only is the growth rate dramatic, but they are doing it in a country with several hundred million mobile phones.

2. Another aspect of their business entails "Virtual Call Center Stations". In North America text messaging on mobile phones is popular but nothing like in China where billions of messages are sent every month. SMS is the basic form (short messaging) but the major growth is in MMS (multimedia messaging). TCOM provides services never heard of in North America for mobile users. Their highly customized, scalable, flexible interactive services, offers clients high value, low cost sales and service solutions using the highly scalable interactive MMS response (IMR), interactive voice response (IVR) and speech recognition solutions. They combine this with an extensive network of China contact centers for live operator support and provide their clients with opt-in subscriptions of Short Message Services (SMS) and Multimedia Message Services (MMS).

So just how big is the market for this? Consider their April 4th news release where they landed a contract to provide services to the CCCA (China Car Club Alliance). The CCCA has 400,000 members! For North Americans, these numbers are staggering. Picture one of the largest lobby groups in the United States -- the National Rifle Association. They have been around since 1871 and have 3 million members. This is a "car club" with 400,000 members - the purchasing power of which is amazing.

The point is ... the growth potential of high quality companies in China is tremendous. Since the end of 2004, TCOM's Virtual Call Center Stations have increased by 109% to 217. In late March, they also announced a new product line (IBS v4.1 Enterprise Suite) which will target small and medium sized enterprises in China (SME's) -- a business with anywhere from a few employees to several hundred employees. In China, the number of SME's is amazing -- somewhere between 1 and 2 million. They have a solid alliance with China's leading B2B company (ICChina) who have established a network of approximately a half million SME's throughout several hundred cities in China. ICChina has already committed to take 600 licenses over a 1 year period (valued at a minimum of $3 million) but the potential exists to increase this number significantly over the next 12 to 18 months.

TCOM has several subsidiaries and each one has the potential to be a significant contributor to the bottom line. Right now the company is focused on China but the technology behind SEO4Mobile could be used across Asia if its success continues to grow rapidly and it can be translated and code written in various languages. Right now however, this is not even necessary. They are sitting in the middle of the most lucrative mobile phone market in the world, and cutting edge technology, products, and services, could see exponential growth in coming years. Add to this, over 1 million small business users for their other products and services, and you have a very compelling story.

Pure China Plays Are Not Easy to Find

Unless you're prepared to pay double digits for the major high profile players in China, it's unlikely you'll find another tech company in this same price range. Especially one with so much growth potential and such strong underlying technology and market share. All of these companies below had the backing of major investment banks and as a result, have extensive analyst coverage and enormous amounts of cash in the bank. Telecom Communications is not big enough to attract the major brokerages (yet) so their goal is to continue building significant market share in China and developing products and services that give them a significant competitive advantage. While the ultimate objective is to get listed on Nasdaq, they may become a merger or takeover target before that happens (within 12 to 18 months at current growth rates). As the Chinese economy continues to expand and the demand for mobile phone products and services grows even larger, major corporations may look to companies like TCOM as a way to capture market share rapidly. These pure China plays boast market caps in excess of $1 Billion:

Sina Corporation (SINA/NASD $26.95) -
http://www.stockhouse.com/comp_info.asp?symbol=SINA&table=LIST
Shanda Interactive (SNDA/NASD $31.90) -
http://www.stockhouse.com/comp_info.asp?symbol=SNDA&table=LIST
Netease.com (NTES/NASD $53.00) -
http://www.stockhouse.com/comp_info.asp?symbol=NTES&table=LIST

300 Million and Growing

Deloitte Touche Tohmatsu (http://www.deloitte.com) is one of the largest accounting and consulting firms in the world, serving over half of the world's largest corporations. They recently prepared an extensive report on business in China and below I have summarized the most important points as they are very relevant to Telecom Communications in their goal to become a world class competitor.

China is quickly shifting from a combination of state-owned and foreign- invested enterprises, to private & public corporations prepared to challenge some of the largest companies in the world. They are not only prepared to serve the needs of their own domestic market, but they are eager to become world class enterprises with a global reach. Much like Japan in the 1950's and south Korea in the 1970's, Chinese companies are set to become world leaders where their strength is not based solely on low cost production. This is a country with tremendous skilled talent that is well disciplined, competitive, and prepared to take calculated risks to achieve their objectives.

In order to succeed on a world class stage, Chinese companies must shift their focus away from simply maximizing output and employment, to improving financial metrics, customer relationships, and properly dealing with competition (both local and foreign). Companies like TCOM are demonstrating this already with world class proprietary technology for mobile phones and customer service that is second to none -- a perfect example was the car club contract in which TCOM was chosen to provide services to over 400,000 members. Right now most North Americans believe Chinese companies want to be more like them. In contrast, we may soon find that corporations will strive to operate more like the Chinese.

The Chinese economy is the fastest growing in the world. However, it is not without its challenges. Key factors within control of the Chinese government include; sensible monetary and fiscal policy, exchange rate management, and international agreements on trade and capital. History has shown that the most successful economies are those that provide the right legal and institutional framework for a market economy. The Deloitte study identified 4 key elements of China's economic success. They include:

1) Rule of Law - Foreign investors must be confident that intellectual capital & private property rights are protected and that any grievances will be addressed and held up in Chinese courts. Not only will this help secure foreign investment, but it will drive the mergers and acquisitions market in China. Without this, foreign capital will move to other regions and possibly miss out on one of the most lucrative booms since the industrial revolution.

2) Rules of Governance - Foreign investors must be guaranteed they have transparent information about Chinese companies. Consistent rules of corporate governance must be properly enforced. This is where investing in Chinese companies that are listed on North American stock exchanges is a major benefit. These companies (like TCOM) are going out of their way to ensure transparency through SEC guidelines and filing requirements. They are hiring auditors recognized by the exchange, and following strict rules of accounting and reporting. These public companies will be amongst the first to benefit from merger and acquisition activity by foreign multi-nationals interested in rapid access to the Chinese economy.

3) Development of Human Capital - For decades China was known for its vast access to cheap, low skilled labor that was the driving force behind factories exporting around the world. This is no longer the case and Chinese corporations have moved well beyond this perception. Locally, Chinese corporations are serving a market in excess of 1 Billion people and are doing so with world class technology. As they consider moves beyond their own borders, they will also increase the skills necessary to operate a world class organization -- management, researchers, other skilled professionals. The government and Chinese corporations will have to (and most already are) invest in education, training, and retention strategies. Chinese corporations like TCOM that are publicly listed, have the benefit of various employee incentive programs that include stock options. For many in China, this benefit alone can be a major factor in deciding what organizations they will work for and this will help companies like TCOM attract and retain highly skilled labour. As we've seen in North America, employee stock option programs have been a driving force behind the success of many of our best technology companies.

4) Business Culture - Business leaders in China must be ethical, devoted to their company's success, and mindful of laws governing their corporation (whether local or through the SEC). Telecom Communications is very committed to all of these requirements. In fact, the company is so committed to success, they recently replaced their CEO after 1 year because they felt someone even better could lead the company going forward. This was even after tremendous growth in the past couple quarters -- but in their pursuit of perfection, it was not enough.

One final issue is the country's entry into the World Trade Organization (WTO). This will require China to remove any discriminatory rules that protect local companies from foreign competition. This is not an issue currently affecting TCOM as their products and services are very unique. Even technology behind products like SEO4Mobile are unique to the outside world so right now there is no fear of outside competition. However, China as a whole must still address these issues and when they do, Chinese companies will emerge even stronger -- particularly if it means they will have access to global capital and credit markets. At that stage, foreign banks will fully participate in the Chinese economy -- a requirement under WTO rules.

Telecom Communications has a Very Bright Future

According to the Ministry of Information, China's internet users for 2004 were estimated at 111 million (from 81 million in 2003). With 1.3 Billion people, that is only 8.5% of the population. The United States has 300 million people, approximately 60% of which are on the Internet. If China Internet usage grows to 20%, there will be as many people on the internet in China as the entire population of the United States.

While the internet potential is staggering even for the few companies that dominate that space in China, the number of mobile phone users is even more impressive. Current statistics show approximately 300 million mobile phones in use and billions of text messages sent every month. As availability increases, these numbers will hit staggering proportions.

Convergence between mobile phones and the internet will play a major role in future growth. Within the last two years, the mobile internet market has grown from 200 million to more than half of the 1.3 billion mobile phones used worldwide -- a revolution some are comparing to the switch from the electric telegraph to the telephone in the last quarter of the 19th century.

According to industry experts, the number of internet connected mobile phones will soon exceed by a large margin, the number of internet-connected PCs. Analysts estimate the worldwide number of active PCs to be between 500 million and 750 million, well short of that 1.3 billion cellphone figure -- and the gap is going to grow, particularly in places like China, where generations may skip the PC altogether and move directly to smaller mobile units of one type or another. Companies like TCOM who are amongst the first to provide leading edge technologies and content for this market, could see exponential growth in market share and revenue.

Disclosure: Danny Deadlock owns 15,000 shares of TCOM.

About Telecom Communications, Inc.

Telecom Communications, Inc. is a Total Solutions Provider that offers Integrated Communications Network Solutions and Internet Content Service in universal voice, video, data web and mobile communications for interactive media applications, technology and content leaders in interactive multimedia communications. It develops, markets and sells a universal media software solution for enterprise-wide deployment of integrated voice, video, data web and mobile communications and media applications. Telecom Communications, Inc. does business in Asia via its wholly owned subsidiaries, Alpha Century Holdings Limited (http://www.SEO4Mobile.net ),3G Dynasty Inc. (http://www.SEO4Mobile.com), Huiri Electric (PY) Limited, Arran Services Limited and IC Star MMS, Limited.

About MicroCap.com

Danny Deadlock is the Publisher of MicroCap.com (http://www.microcap.com) who conducts research and publishes reports on various companies and industries. His research report is published on Stockhouse each week. In addition to the editorial published each week on Stockhouse, Danny Deadlock offers MicroCap Premium which is published throughout the week by email and includes more in-depth research on stocks in their portfolio, new picks throughout the month, and broader market commentary & forecasts.

Safe Harbor

The statements made in this release constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect," or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, changing economic conditions, interest rates trends, continued acceptance of the Company's products in the marketplace, competitive factors and other risks detailed in the Company's periodic report Filings with the Securities and Exchange Commission. By making these forward- looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

For more information, please contact:
Ms. Sandy Tang
Telecom Communications, Inc.
Tel: [phone]
Email: [e-mail]


Source: Telecom Communications, Inc.