Subject: [NEXTEL-1] Boston Communications CEO braves looming crisis

From: [email-masked]
Date: Fri, 18 Jul 2003 16:29:27 -0400

http://biz.yahoo.com/rc/030717/telecoms_bostoncomms_verizon_1.html

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Reuters

Boston Communications CEO braves looming crisis
Thursday July 17, 6:23 pm ET

By Sinead Carew

NEW YORK, July 17 (Reuters) - Boston Communications Group
Inc. (NasdaqNM:BCGI - News) Chief Executive E.Y. Snowden put a brave face on
the potential loss of over half the prepaid billing company's
revenue on Thursday, saying he has other chances for growth.

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Shares of the Woburn, Massachusetts-based company plunged
almost 40 percent after it said on Wednesday Verizon
Wireless(NYSE:VZ - News; London:VOD.L - News) the source of 52 percent of BCGI's
revenue so far in 2003, wants help in testing its own in-house
system in 2004.
The potential customer loss could bring its revenue back to
where it was two years ago, Snowden said, but he told Reuters
in a phone interview the company could make up the shortfall if
Verizon walked away.
"We have discussions going on right now with very
significant prospects," Snowden said. "There are a number of
ways this could be replaced."
He did not give specific details of potential new business
but said he was still in contract renewal talks with Verizon,
the No. 1 U.S. cell phone service provider which wants BCGI to
help it move to a home grown billing system.
"Its obviously material they've given us a formal request,"
Snowden said. " But I would not conclude this is in some way
waving a flag saying we're done, because we're not."
But not everybody has his optimism. Investors ran and left
Boston Communications shares off $8.45 at $12.70 at the close
of trading on the Nasdaq stock market on Thursday.
First Analysis analyst Howard Smith told Reuters after the
news emerged on Wednesday he was worried Boston Communications'
other large customer Cingular Wireless (NYSE:BLS - News; NYSE:SBC - News) could
possibly threaten to follow Verizon's footsteps.
Cingular brought in a quarter of the billing company's
revenue so far this year.
Another analyst, Greg Gorbatenko from Loop Capital
management, said in a research note the threat of Verizon
leaving eclipsed the company's higher than expected
second-quarter earnings and its raised expectations for
full-year earnings.
Gorbatenko advised investors to avoid the stock for now.
Since BCGI has ample room to reduce the prices it charges, he
said the Verizon news could mean there are "service issues."
Snowden agreed that Boston Communications could have room
to lower its prices but denied any service issues.
Verizon spokeswoman Brenda Raney confirmed that work has
begun on a billing system that would let customers pay for
phone calls in advance as an alternative to monthly bills. It
could look to move to the home grown gear next year, she said.
"This is not a reflection of (Boston Communication's)
service. This a reflection of how we want to go forward, "said
Raney who noted that the final decision had not been made yet.
But the complexity of building a prepaid system could mean
Verizon takes longer to move, or decides to stick with Boston
Communications in the end, Snowden said.
Prepaid systems are complicated as real time information
about a customers balance is needed to make sure the person has
enough prepaid credits left to make a phone call.
Boston Communications also has links to 150,000 retail
points where customers pay in advance for calls. Raney was not
sure if Verizon would set up these connections.
The billing company has seen its share price more than
triple in the last year as U.S. wireless phone companies,
including Verizon made bigger marketing splashes to attract new
prepaid customers as their post paid customer growth slowed.
The company, which typically signs two to three year
contracts, has also signed up Cingular Wireless (NYSE:BLS - News; NYSE:SBC - News),
Alltel (NYSE:AT - News) and Nextel Communications (NasdaqNM:NXTL - News) as clients.
Cingular is a venture of regional phone companies BellSouth
and SBC Communications Inc and Verizon is a venture of
Britain's Vodafone Plc and New York's Verizon Communications.
Snowden noted that older companies are more inclined to do
their billing in-house than newer operators like Nextel.
"We think we're in a pretty good space and continue to
believe that," Snowden said. "There will be plenty of things
for (shareholders) to be happy about."

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