FoneWorx swaps boards

Kimberly Guest
By Kimberly Guest, ITWeb contributor
Johannesburg, 13 Jun 2007

Investment holding company FoneWorx this morning transferred its JSE listing from the venture capital market to the Alternative Exchange (AltX).

With a market capitalisation of R110 million, the company's subsidiaries provide interactive telecommunication services to the advertising and media industries, business services such as electronic faxes to the business community, and aggregated applications to SMEs.

FoneWorx also hosts switching services and provides music downloads and content to corporate clients. It has its own switching platform connected to all telecommunications networks, and hosts and manages services throughout Africa.

Since listing as Interconnective Solutions, in 1999, the company embarked on several acquisition and black economic empowerment deal discussions. In April 2006, the company acquired a 40% equity stake in Altonet.

Later the same year, the company proposed a name change to FoneWorx, the name of its primary subsidiary. Following a December 2006 announcement of its intention to transfer to AltX, FoneWorx's share price has risen from 28c to a closing price of 95c yesterday.

Longstanding company CEO Mark Smith explains the rationale for the board move. "We have transferred to AltX to raise our profile and raise additional capital for organic growth. Liquidity in the shares will also improve as we transfer from the venture capital market."

New company

FoneWorx recently restructured and disposed of non-core divisions. One of these is Valutronics, which provides batons for the security industry.

Smith explains: "We donated this company to a black empowered business, and we are offering training and support to the new owners to ensure a successful handover. This is part of our social responsibility programme."

The company also believes it is able to benefit from growing convergence in the communications industry.

"FoneWorx is very well placed to provide a broad range of value-added services to defined customer segments. Voice services will decline and there is a solid opportunity to embrace new opportunities around data- and media-rich services to customers who demand bundled services," says Smith.

FoneWorx has developed an integrated switching platform that offers tailor-made services in four areas. Infotainment and business services are the primary income generators for the business and new services are expected to be launched shortly.

The Infotainment division provides hosting for SMS, interactive voice response, promotions, competitions and voting services, throughout Africa. Under its business services umbrella, the company offers voice and data services such as Fax2Email, SMS, data storage and PC2Fax aimed at the SME market.

Its switching services and media content divisions provide loyalty programmes and full track audio and video downloads to PCs and mobile devices respectively.

FoneWorx announced its interim results at the end of December, with revenue up by 115% on the previous period, to R29 million. Earnings increased by 544%, to R4.2 million; headline earnings were up by 437%, to R4.4 million; and cash-on-hand increased by 412%, to R12.7 million. Its annual results are due to be announced in August.