by Thilak S. Fernando

Advanced technology has Œshrunk¹ the world into one Global Village and people are only few seconds away, at least in theory, due the contribution made by the latest innovations in telecommunications. International telecommunications have revolutionised Britain since the deregulation of the BT monopoly which existed for years. In a competitive price and business war customers are given multiple of options by various carriers with different systems. Alpha Telecom, one of Europe¹s largest alternative telecom carriers with an annualised current turnover of approximately £100 million, sailed through a rough financial storm in July 2000 the and have emerged out safer and stronger than ever before, with a new face lift. In any competitive market emergence of adverse publicity can bring about poor turnover results. In extreme cases it is quite possible to become victims of orchestrated vilifying campaigns by other competitors. Alpha Telecom became such a victim immediately after their Blue July encounter with barrages of ³vicious rumours, destructive fabrications, speculative and baseless comments². Alpha Telecom being a well established business which is helping the Sri Lankan community in Britain to a larger extent with their telecommunication facilities, Tilak S. Fernando recently made an investigative approach into the many speculative tittle-tattle by interviewing Alpha Director of Marketing Mr. Colin Loubser and Mr. K.T. Konesh, Director of Sales. The following is an excerpt of the interview:

TSF: In the wake of numerous Œtelltale¹ which are floating about among the Sri Lankan community in the UK about your establishment would you like to briefly describe the Corporate profile of Alpha Telecom?

CL: First and foremost let me assure you that the rumours aimed at us are entirely without substance. Alpha Telecom was established in 1996, employs over 150 staff and has grown to become one of the largest alternative telecom carriers with an annualised turnover of almost £100 million. Our prepaid telecommunications products are sold in twelve European countries and we are expanding further.

TSF: As you will appreciate, there¹s no smoke without fire. How do you account for the news that Alpha went into receivership and you are not financially steady at all at present ?

CL: Our fantastic results today speak for themselves. We are totally financially secure and anyone alleging that we are not should simply be ignored. To put the matter in perspective here is the background: From 1996 to July 2000 Alpha traded under the name of Œ Alpha Telecom UK Ltd. This is the company that was placed into receivership in July 2000 due a complex shareholder dispute and whose assets were sold after just four days to Alpha Telecom Communications Limited, which is a fully solvent, profitable and stable business. It is important not to confuse Alpha Telecom UK Ltd with Alpha Telecom Communications Limited. The Alpha Telecom Group business was acquired in July 2000 by an investment consortium led by private investor clients of WJB Chiltern ­ an international and domestic tax group and well established corporate finance advisors. (www.wjbchiltern.com) The Group Holding company is the Bethany Group Ltd., a British Virgin Islands company (³Bethany²), having a share capital of £6 million, fully underwritten by the shareholders.

TSF: How did you overcome this problem and recover so soon, within four days ?

CL: The business was swiftly restructured and refinanced by a team of specialists from WJB Chiltern with international expertise in this type of buyout and restructuring.

TSF. How did they help you out ?

CL: The investors provided the necessary funds to restructure the business, and to fund its working capital. Loss making sections were sold off, and the new Group has moved into an operating profit position). At the time of the crisis we owed several million pounds to our main carrier WorldCom which has been paid off and today the Company is free from any such liabilities. We have no bank borrowings.

TSF: Apart from pumping finance into the company what else has improved the company so quickly ?

CL: Since July 2000 the new company has been through a tremendous change of strategy and direction. We are now totally focussed on selling prepaid services. The hierarchy has changed and we have a new Chairman, David Dey, a well recognised executive within the Telecom industry. He was the former chief executive of Energis ( 1992- 1995), a main Board Director of British Telecom ( 1987-1991),and a former Director of the Plessey Group. We also have a new Chief Financial Officer ­ Bernard Lightbound who was Chief Financial Officer for Gillette - Europe. Our new IT & Telecoms Director is Canadian Jef Kent who worked previously at Interglobe and Redstone.

TSF: Who are the other subsidiaries of Bethany conducting Alpha business?

CL: Alpha Telecom Communications Ltd., Alpha International Overseas Ltd., and Alpha Telecom Luxembourg S.A. Through these subsidiaries, agreements have been established with carriers who provide telecom services to the Group.

TSF: How about Alpha equipment, service and countries of operation ?

CL: We have our own state of the art switching equipment in the UK, Germany and Italy and have one of the most luxurious and efficient call centres in the Europe. Our switching equipment is connected with major telecommunications carriers. We employ over 150 staff and have offices in London, Milan, Luxembourg and Holland. In addition we provide services in Germany, Spain, Switzerland, Ireland, Belgium, Gibraltar, Czech Republic and Poland. We are working on several other countries including installing a switch to the USA.

TSF: And your products ?

CL: Alpha Telecom deliver quality telephone calls to the consumer, at competitive prices within the UK and worldwide, through a variety of easy to use pre paid services: Disposable Phonecards which are distributed via 30,000+ retail outlets, including John Menzies and Superdrug; Prepaid Accounts ­ Alpha has over 100,000 active prepaid account holders in the UK; Call Shop Services - across Europe. With the strong financial support we now have we plan to launch new and exciting products this year.

TSF: Do you have any affinity partnerships ?

CL: Yes, we are very proud of our association with many Blue Chip companies. Alpha Telecom works with a number of different industries, forming strategic alliances to provide phonecards, phone account and phone card promotional services - e.g. London Transport, Credit Suisse/First Boston, The England Football Association, Campus Link, Last Minutedotcom, Hogshead Pubs, Cancer Research, the Hemisphere Alliance and Hobsons Publishing are a few of the well known brands and businesses to which Alpha Telecom has provided services.

TSF: How do you terminate calls to Sri Lanka? Is it via satellite and Internet?

KTK: We send our calls via our own satellite link. It is illegal to terminate international calls to Sri Lanka via Internet as local calls. Alpha Telecom has a unique partnership with Sri Lanka Telecom (SLT), which gives customers excellent service for all its products, 7 days a week. Technical support for Alpha¹s products and the Alpha network is taken care of by its own team of trained engineers and technicians.

TSF: Can you elaborate on your Œ Unique Partnership¹ with the SLT?

KTK: Alpha switch is connected via satellite to the SLT switch in Colombo. When a customer calls from London, SLT takes it over and terminates at the requested destination, thus maintaining the quality of the service. For this service we pay SLT a premium. In other words we give Sri Lanka Telecom an income in foreign exchange. In our last quarter, December 2000, we have remitted approx. US$350,000.

TSF: So, Do you mean to say that every call that is terminated in Sri Lanka, other than going through SLT, is an illegal operation?

KNK: I would not like to comment on the legality of other operations, but if this is taking place it is morally wrong because the country and SLT does not get the benefit of the foreign exchange income.

TSF: There are other competitors in the market offering international calls to Sri Lanka at much cheaper rates, and they openly advertise so. How do they manage to give calls that cheap and do you think they go through alternative means such as the Internet etc ?

KTK: WellŠ I do not know how they do it or wish to discuss the legality aspect of other operators as I mentioned before. We can only speak for ourselves. For me, their offer does not add up. We believe that quality in our service is paramount. Some people try 8 - 10 times from other access numbers before they can even get through to Sri Lanka. Several of our customers have left us for cheaper rates elsewhere and have come back again because of this very reason. Most of the time they have complained that conversations are not clear and voices keep on resonating and they waste their valuable minutes due to echoing and breaking of voices during conversation. These are the pitfalls. It is also interesting to hear from such Œreturned customers¹ that they have had to pay colossal amounts of money between £250-£1000 to balance such advertised cheap rates to Sri Lanka. If you look at that way our customers too can have even cheaper rates as we give extra bonus time for payments £50 upwards and this obviously reflects on the extended duration. More to the point, our lines are crystal clear.

TSF: What is the relationship between Alpha and DNI ?

CL: DNI is purely an independent and successful multi-level marketing company. We have nearly 400 other agents offering Alpha services. DNI happens to be one of the best and is extremely important to us at present as they bring 4% of our business.

TSF: Why do Alpha and DNI tariffs to Sri Lanka differ? In fact, it is much cheaper- 24p a minute through DNI ? Don¹t you think this tends to confuse some prospective customers?

CL: Alpha has entered into an agreement with DNI on preferential rate covering the Indian Sub continent. We give them an exclusive tariff to Sri Lanka because they bear their own marketing costs for these areas and are doing such a marvellous job. DNI earns and deserves their special rate. It¹s a bit like some travel agents offering you a better airfare than others because of their preferred relationship with the airline.

TSF: How do you structure your pricing policy, say for Sri Lanka ?

CL: It is done by a Pricing Forum which consists of a Pricing Analyst and several telecoms experts. An Accountant controls the Forum. This forum is responsible for studying the market values and deciding on the real and effective rate considering all costs. We always try to give the best rate possible without compromising our business or the call quality.

TSF: One of the other serious allegations against Alpha is that you support the LTTE, the terrorist group who is fighting a civil war in Sri Lanka!

CL: This allegation is totally unfounded. We are absolutely and categorically not involved with any political party or terrorist organisation, and will NOT be. We are totally a non-discriminatory company working across every ethnic community group regardless whether they are from Australia, Ghana, China, factions within Turkey etc. We provide international phone calls to every single country and every community in the world. Key to our sales is that we rely heavily on community based organisations - across the board. You mention LTTE - I have been at Alpha for three years now and this is the first time I heard of them. Believe you me, I had to ask my Sri Lankan colleagues who work here what it stands for! KTK. This may have arisen from the fact that I am a Director of Alpha and I am Tamil! I want to place on record here that I was the originator of DNI who brought the Sri Lanka package to Alpha in 1996. During that time weI had some Sri Lankan partnes who were very effective sales person who helped to build up the Sri Lanka market. But unfortunately they contravened the agreement between Alpha and DNI by getting the commission out of Alpha ( which included some advertising revenue out of Alpha) and dealing with Alpha competitors simultaneously. Neither Alpha nor I could do anything about it. Our hands were bound and according to the conditions of the agreement orders came from DNI for their removal. It was very unfortunate and we had to execute the orders very reluctantly.

TSF: What is the proportion of your Sri Lankan staff ?

KTK: We have a mixuture of staff from all communities including 35 Sri Lankan staff. One of our senior managers is a Srilankan Burgher lady. It is my pride and joy to get more and more of our own country people to give a quality service to our own people and also let Sri Lanka benefit from this. I do not believe in any discrimination or ethnicity. I love my country and all Sri Lankan people are my people to me. That is why I personally have endured and negotiated with the Sri Lanka Telecom (SLT) and formed a unique partnership to give our customers excellent quality service lines into Sri Lanka at the best possible rates. Every community, every Sri Lankan association in the UK is important to us as I have no bias at all. In fact We are currently preparing personalised phone cards to two Sri Lankan Buddhist Temples on a charity basis. We provide approximately two million minutes a month to SLT which, translated into revenue form, works out to approx. US $350,000 a month. I am delighted to inform that we are currently expanding our capacity with SLT to make it six million minutes a month which will be a large contribution in terms of income to SLT for terminating our calls. Therefore, its rather inane if people were to spread wild rumours willy nilly and call every Tamil person a terrorist ! Is Muttiah Muralitharan in our cricket team a terrorist too? He is also earning quite a lot of money these days out of cricket so, should he also be labelled as a supporter of the LTTE ? This is rather a sad state of affairs.

TSF: You were mentioning about a SLT delegation to your offices recentlyŠ

KTK: Not a delegation, but the SLT Chairman was in our office only a few weeks ago and I have briefed him and shown him all our records. A comprehensive report to the Sri Lankan government highlighting our contribution to the Sri Lankan expatriate community and to our Country as a whole is in my computer at this very moment and is due to be despatched to the Sri Lankan Government to show how Alpha is trying its best to help Sri Lanka to become a foreign exchange earner through our partnership. With regard to the LTTE questions you have asked, I wish to disassociate myself from these unfounded rumours which are detrimental to the image of our company and business as a whole. Alpha is a totally multicultural organisation and we believe in full transparency - our doors are open to anyone that has a question.

TSF: Intelecom Magazine has carried an article on Alpha giving a sledge hammer blow to your company. Would you like to comment on that ?

CL: Yes, it was a damaging article which they published. We obviously were worried that they carried the article based on some unsubstantiated rumours which were several months old at the time. I have spoken to them on numerous occasions since then, and have given them updated information about our company. They are pleased with Alpha¹s remarkable changes and they have agreed to publish the true facts. At the end of the day we have put our money where our mouth is, and have proved our good faith to all our customers, who have never suffered at all. If that is not enough ­ what is?

TF: How about the Receivership matter ?

CL: The receivership matter was handled completely above board and anyone can have access to the records and documents if they wish. There were no funny games. Thankfully that¹s all over and we have moved on.

TSF: What have you lined up for the future?

KTK: Alpha now has successfully sold off all its post paid business as planned, and is now concentrating solely on pre paid products. Quality and value continue to be our main business drivers. We are, therefore, looking to acquire other top, reliable operators to provide the best possible connections to the ever-growing volumes of traffic that we are carrying. In addition, we are going to introduce WAP facilities on mobile phones and a universal card which will give access to mobile phone e-mail and internet facilities.