TELECOM COMMUNICATIONS (TCOM)

[happycampers]

Telecom Communications, Inc. Announces Stockhouse.Com Editorial Covers TCOM: 'China, Can You Hear Me Now?' By Danny Deadlock
Danny Deadlock's Research Leads Him to the Far East and a Telecom Company with

the potential of a Billion Served

HONG KONG, Nov. 3 /Xinhua-PRNewswire/ -- Telecom Communications, Inc. (OTC Bulletin Board: TCOM) announced today the release of an independent investor research report published by MicroCap.com on Stockhouse. The report comments upon the explosive growth within the Internet industry in China and specifically highlights the potential for Telecom Communications, Inc. within this industry.

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 Shanhe Yang 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."

China, Can You Hear Me Now?

Monday, Nov 1, 2004 By Danny Deadlock. The report is available at http://www.stockhouse.com/shfn/editorial.asp?edtid=17408

Telecom Communications (TCOM $0.43)

52 week High $2.36 Low $0.09 Market Cap: $30 million

Too Much Money, Not Enough Players

Thanks to Google and Yahoo, major U.S. Internet players are back in vogue and the few public Chinese internet (or mobile phone services) companies you can find, are commanding huge value as the money rolls in by the truckload. All listed on Nasdaq, SINA ($33.71), SNDA ($31.20), and NTES ($46.06) all boast revenue in the range of $200 million, cash in the range of $100 to $200 million, and market caps in the range of $1.5 billion!

Silicon Valley venture capitalists and several large public companies are dying to tap into the Chinese tech market but they're finding this a tough nut to crack. Earlier this year, Google made a small investment in Baidu (China's largest and most popular search engine), but even after raising only $11 million from venture capitalists, it stated it was profitable and did not need to raise more money at the moment -- words rarely heard on Wall Street. Numerous investment bankers have approached Baidu about a Nasdaq IPO but the company is in no rush after seeing their recent sales quadruple.

Cliff Higgerson, partner at Palo Alto's ComVentures, recently returned from China and is evangelizing his other partners to invest in telecom there. "We feel China is the most important single event in a generation," he says. For years, if not decades, entrepreneurs have dreamed of making it in China, salivating at the prospect of more than a billion people and an economy growing at 9 percent a year."

"China draws more investment capital in a year than India does in a decade," says Ram Shriram, an angel investor and early backer of search engine Google. He has invested mainly in India, but China is grabbing his attention. "It makes the industrial revolution look lame in contrast," he says.

An Insatiable Appetite for Technology

You can understand the enthusiasm. According to the Ministry of Information, China's internet users are estimated to grow to 111 million this year, 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 260 million mobile phones in use and billions of text messages (SMS -- short message service and MMS -- multimedia messaging) sent every month. As availability increases, these numbers will hit staggering proportions.

The Convergence - Mobile Phones and the Internet

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 cell phone 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.

China based Sina Corp ($1.7 billion market cap) recently announced that its net profit rose 24% in the third quarter because of higher revenue from its new value-added mobile services (revenue in total jumped 65% to $52 million). The Chinese have an estimated 250 million mobile phones in use and unlike North Americans, send Billions of text/instant messages (SMS and MMS) every month. Their dependence upon the mobile phone is equivalent to our dependence upon the computer and it is estimated 30 million new users will arrive every year.

In July 2004, SINA acquired (for approximately $36 million U.S.) a private company with an instant messaging technology platform that was only launched in 2002. Within 2 years that company obtained 80 million registered user accounts. As these China internet companies continue to be acquired by North American corporations (in 2003 it was estimated that Yahoo paid $120 million for 3721 Inter China Network Software), it will drive up the value of those that remain.

Snapshot View of TCOM

The company trades on the OTCBB (OTCBB: TCOM) in the U.S. but only to accommodate the raising of capital and provide liquidity for existing shareholders (see Taikang below). Otherwise this is a pure play on a Chinese based technology company. All management is in China and all clients (at this time) are in China. TCOM specializes in technology for mobile phone applications with an emphasis on short messaging (both text SMS and multimedia MMS). They cover all aspects of the technology and even provide corporations they partner with a call center to support their clients. Their business partners already include some of the largest internet and mobile phone companies in China -- Shanghai Linktone, 5Wan, Tencent, and 3721 (div. of Yahoo). In only a few months of establishing these relationships, TCOM acquired 6 million subscribers for its services.

This is only one aspect of their technologies but the SMS/MMS solution for corporations offers advanced internet, wireless capabilities without the need to install expensive hardware at the customer location. Each user gets a unique code number and an associated web page to manage incoming and outgoing short messages, multimedia messages, phone calls, voice mails and emails with one common interface. The service also allows simple, rapid administration of a company's telecom services, including adding new customers and moving telephone number locations online (VoIP) without the cost of a telecom support department.

End users can consolidate their multiple phone numbers (home, office, mobile) with a single personal telephone number so callers reach them wherever they are. A personal virtual SMS/MMS number handles all incoming faxes. The unified visual mailbox conveniently manages voicemail and faxes just like e- mail. Robust call logs and integration with Microsoft Windows Media Player and Instant Message allow users to make and auto reply questions with just a mouse click.

The Importance of SEO4Mobile (Search Engine Optimization for mobile

phones)

SEO4Mobile appears to be the first service of it's kind offered anywhere for mobile phones. It is very important as most of you may remember that the major search engines in North America (Yahoo and Google for example) could not develop a money making business model until pay per click advertising came along (pioneered by Overture who were bought out by Yahoo for $1.6 billion). Now the major search engines are reporting enormous profits on explosive revenue.

SEO4Mobile offers wireless mobile phone providers the ability to use a short message service (SMS) search feature. Users who enter a relevant keyword or keyword phrase, along with a geographic identifier, can send searches in via an SMS and receive a multimedia response that has been processed through a search engine on the internet. By specifically laying out a separate search SMS for the geographic portion, SEO4Mobile helps structure the search in a simple and efficient way for the searcher.

SEO4Mobile will then parse out its advertiser keyword ads that have a local identifier as it sends them to its distribution partners, thereby returning very targeted results for mobile searches. This augments TCOM's recently announced pay-per-SMS service, as pay-per-search advertisers choose the region in which they wish their advertisements to be displayed.

Pay per click advertising for the search engines has become a multi- billion dollar business and when you consider the importance, and enormous size, of the mobile phone market in China, this technology has the potential to hold tremendous value. Sales in Yahoo's advertising business more than tripled to $765 million, due its acquisition last year of Overture. While the market in China still has a long ways to reach that point, iResearch estimated the country's search market will be worth an estimated $50 million this year and it is expected to grow to $200 million by 2006.

On October 7th it was announced that TCOM's subsidiary Alpha Century Holdings Limited, was applying for multi-country patents on the SEO4Mobile technology. If it is as unique as it appears, and patents can be locked up, the potential market on a global basis is enormous.

The October 22nd addition of AdMaxB2Search

In another important technology launch, the company released an advertiser maximum bid listing system for mobile phone service providers (very similar to what overture developed for it pay per click advertisers on the search engines in North America). AdMaxB2Search was developed specifically for small to mid- sized businesses who want to add valuable advertising content to SEO4Mobile quickly and simply, without impacting their design or operation. Through a step-by-step, wizard-driven set up, TCOM's advertisers and their partners can easily manage their accounts online. Revenue will be shared between TCOM and the advertisers on a pay per click basis. Advertisers who use the service will be given access to SEO4Mobile's 10 million users and 300 service providers.

Basically this is an Overture scenario all over again but for the mobile phone market. With 1.3 billion worldwide, the potential is incredible -- IF they can lock up patents globally. Either way, it has tremendous growth potential in China alone where the number of mobile phone users should reach 300 million by next year. TCOM will generate monthly fixed fees from advertise distributors and earn revenues on a per-search basis."

Rapid Growth Already and the Importance of Baidu

As mentioned above, Baidu is the leading search engine in China and apparently preferred more than 2:1 over Google. Google owns a minority position in Baidu but that stake is being carefully controlled. On October 26th, TCOM's other subsidiary IC Star MMS entered into a partnership agreement with Baidu. Under this partnership, the two companies will contribute equally to develop content and technology that integrates Baidu with SMS/MMS for the mobile phone market. Content such as entertainment and gaming and other new services will then be marketed through the Baidu portal which reaches 90% of the 100 million Chinese Internet users.

Recent media states that Baidu's sales are soaring in part from sponsored links similar to those offered by Google and Yahoo! Revenue apparently doubled in 2004 and is expected to double again in 2005. It wouldn't be surprising to see Baidu and TCOM working closer together on the SEO4Mobile technology as it would rapidly expand the Baidu market to the several hundred million mobile phone users in the country.

Other significant contracts in 2004 (most over the past couple months):

1) Providing customer care services for more than 3,000,000 clients of Taikang Life Insurance. Creates a fixed revenue of $120,000 monthly over 36 months

2) 2-year contract from Results Group Int'l Limited who serve the main betting entertainment clubs in Asia. Providing Results Group racing information, betting ticket care services for approximately 2 million mobile phone internet opt-in users. Revenue of $64,100 monthly over 24 months plus $6,410 monthly in support fees.

3) Provide services to the 1 million readers of Media Group's Hong Kong travel guide

4) 2-year contract from Valuerise Group using SEO4Mobile. Fixed revenue of $100,000 per month over a 24-month period, plus a percentage share of the revenue earned by Valuerise Group and its partners.

5) Signed a cooperation agreement with World-East Development Group to bundle SEO4Mobile with certain mobile phone handsets with free of charge service to customers for a limited time. World-East runs a large retail chain of mobile phone handset and accessories in China. They sell 950,000 units annually and have 400 outlets along with members of an alliance.

Even as a Pure Play on China, TCOM has fallen below Everyone's Radar (for

now)

When you're a small penny stock it's extremely difficult to attract attention (or buying) unless the media finds your story, or a news release grabs the attention of a large brokerage firm. Right now, one of the few ways to play the upcoming China tech boom is through the billion dollar companies mentioned above. Very few (legitimate) penny stocks are managed 100% from China, have 100% of their clients in China, and have large control blocks of their stock held by Chinese corporations. This in itself creates risks, but it's also the reason people pay $0.40 and not $40 at this stage. Often a person can buy a stock like this and hope that within a couple years it might be worth a couple dollars (or more). The same type of percentages on a $40 stock mean watching a share price go from $40 to $200 (very rare -- but not with penny stocks).

With TCOM I've seen it bounce all over the map and the only way to properly speculate on a stock of this nature is to plan for the worst and hope for the best. A person needs patience of 12 to 18 months and the ability to risk losing half your money (or more). All kinds of scenarios beyond your control could have a negative impact on this stock (foreign policy, poor management, market corrections, etc.) and you should never speculate without assuming that problems can, and often will, occur. In assuming this risk, you do so with the "hope" that the greater risk means greater rewards. With the underlying fundamentals of both the company and China itself, there are tremendous growth opportunities here. IF the company is able to fully capitalize on them, the share price will reflect it.

On October 20th, the company did something very smart and announced that an Asian based company would handle Investor Relations for TCOM and promote the story across China and other parts of Asia. They would hold conferences on how Chinese can buy a stock like TCOM, and provide guidebooks and a hotline. This is the first time I have seen this done and as many of you know, the Asian people can be huge risk takers (you only need to visit the tables in Vegas to recognize this). As the Chinese economy continues to boom, more and more locals will be looking for places to invest their money and strong local stories have the potential to attract significant capital.

There are times when this stock provides tremendous liquidity, and other times when it won't trade at all. You have to time purchases very carefully and always remember that some OTC market makers can be ruthless and manipulative. Never buy or sell these stocks using market orders and be prepared for a possible roller coaster. This is a story that appears to have tremendous potential but its share structure could make it subject to extreme volatility at times.

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 subsidiaries. Alpha Century Holdings Limited, Huiri Electric (PY) Limited, Arran Services Limited and IC Star MMS, Limited (http://www.icstarmms.com/ ).

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.

This announcement contains forward-looking statements that involve risks and uncertainties, including those relating to the Company's ability to grow its business. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the company's limited operating history, the limited financial resources, domestic limited management infrastructure or global economic conditions -- especially those relating to China, activities of competitors and the presence of new or additional competition, and changes in Federal or State laws, restrictions and regulations on doing business in a foreign country, in particular China, uncertainty that this or any other acquisition can be completed and conditions of equity markets. More information about the potential factors that could affect the company's business and financial results are included in the Company's filings, available via the United States Securities & Exchange Commission.

For more information, please contact:

Mr. Benny Huang of Telecom Communications, Inc.

Tel: [phone]

Email: [e-mail]

Telecom Communications, Inc.

CONTACT: Mr. Benny Huang of Telecom Communications, Inc.,[phone], [e-mail]

Web site: http://www.stockhouse.com/shfn/editorial.asp?edtid=17408



Source: PRNewswire


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