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EXHIBIT 99.3
JOINT PRESS RELEASE
Contacts:
Prabhav V. Maniyar
Chief Financial Officer
Startec Global Communications Corporation
(301) 365-8959 e-mail: [email protected]
David Hurwitz
President and Chief Executive Officer
Capsule Communications, Inc.
(215) 244-3433 e-mail: [email protected]
STARTEC GLOBAL COMMUNICATIONS CORPORATION WILL ACQUIRE CAPSULE COMMUNICATIONS,
INC.
STARTEC CITES VALUE OF CAPSULE'S CUSTOMER BASE, SALES ORGANIZATION, AND ABILITY
TO FURTHER STARTEC'S PUSH FOR COMMERCIAL CUSTOMERS
Bethesda, Maryland, November 6, 2000 - Startec Global Communications
Corporation (Nasdaq: STGC) and Capsule Communications, Inc. (Nasdaq Small
Cap: CAPS) today jointly announced that they have signed a definitive merger
agreement for the acquisition of Capsule by Startec. Startec, based in
Bethesda, MD, provides voice, data and Internet services over its own network
to residential customers and enterprises transacting business in emerging
markets throughout the world. Capsule, based in Bensalem, PA, is a local,
long distance and cellular telecommunications company that caters to small
and medium-sized businesses and residential customers.
STRATEGIC VALUE
"As previously announced, Startec has built its international IP network
largely by focusing on residential customers. We are now aggressively
leveraging that network by substantially increasing our number of business
customers. The growth of this revenue stream is expected to increase our
gross margin in 2001," said Startec Chairman and CEO Ram Mukunda. "Capsule
offers us a customer base and a marketing organization that will help us
obtain that goal." Specifically, Mukunda stated that the Capsule sales
organization will be able to market to businesses on the East and West Coasts
of the U.S. that need to communicate with individuals and other businesses in
emerging economies. He said the first targeted market will be the growing
number of U.S. technology companies that transact business in India. "This
marketing effort will commence immediately," Mukunda added.
Capsule President and CEO David Hurwitz said that Capsule currently has more
than 33,000 customers, over 300 active sales agents, and a very strong
on-line customer service system. "Startec's global IP network provides the
perfect solutions to businesses seeking cost effective, high quality
connectivity across multiple locations," Hurwitz commented. "We can now meet
the demands of our business customers for enhanced IP-based solutions. This
deal combines the strengths of Startec's advanced IP technology with
Capsule's significant customer base, strong distribution channels, and highly
effective back office agent support systems."
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Startec expects to continue its acquisition strategy to increase its number
of business customers while maintaining its market focus on emerging
economies. "This is our time to be aggressive. We have the network and the
products, and we have the focus," said Mukunda. "We will seriously consider
acquisition candidates that fit with our strategy and offer the prospect of
being accretive within the first quarter of our ownership, and preferably
from day one."
During the second quarter 2000, Capsule achieved $9.6 million in revenue,
gross margin of 27% and negative EBITDA of $772,000. Startec expects to move
Capsule's customers to its IP network and obtain significant operational
synergies. "We expect to achieve network and operational synergies that will
allow the Capsule acquisition to be accretive to EBIDTA by the time the deal
closes," said Prabhav Maniyar, chief financial officer of Startec.
STRUCTURE & TERMS OF THE MERGER
Under the terms of the merger, subject to certain price adjustments, Startec
will issue approximately 2.7 million shares of common stock to shareholders
of Capsule. In addition, Startec will issue an aggregate of $3 million in
5-year, unsecured promissory notes to two Capsule shareholders owning
approximately 74% of the issued and outstanding shares of Capsule.
The merger agreement, which is expected to be formally consummated in the
first quarter of 2001, is subject to the conditions set forth in the merger
agreement and requires, among other things, the approval of Startec and
Capsule shareholders as well as the receipt of regulatory approvals. The
approval of the merger by Capsule's stockholders is assured because the two
Capsule shareholders beneficially owning in the aggregate approximately 74%
of Capsule's outstanding common stock have executed voting agreements
committing them to vote all of their shares in favor of the merger.
Pending filing and clearance of the requisite proxy materials with the
Securities and Exchange Commission, neither company has set a date for a
special meeting of its stockholders to approve the merger.
ABOUT STARTEC:
Startec Global Communications Corporation is a leading provider of advanced
communications and Internet services to residential and business customers
transacting with the world's emerging economies. The Company's extensive
affiliated network of international gateway and domestic switches, IP
gateways and ownership in 15 undersea fiber optic cables also provides
IP-based voice, data and video service to major long distance carriers,
Internet Service Providers (ISPs) and Internet Portals.
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eStart, Startec's online brand for a series of ethnic virtual communities,
offers bundled services and other enhanced IP-based services to residential
and business customers.
For more information on Startec and eStart, please visit their Web sites at
www.startec.com and www.estart.com.
Startec's Managed Network Services are currently available nationwide,
scaleable for businesses of any size. Businesses can currently register on-
line to become a Startec Commercial Services customer through the company's
interactive portal, which went live last month. For information on becoming a
Startec Commercial customer, call 800-393-6751 or send an e-mail to
[email protected].
ABOUT CAPSULE:
Capsule Communications, Inc. is a publicly traded local and long distance
telecommunications company that is taking advantage of the convergence of the
current and future competitive technological and regulatory developments in
the Internet and telecommunications markets. Capsule provides an integrated
suite of communications services to small and medium-sized business and
residential customers, including local, long distance, calling cards,
dedicated access, DSL, private line/frame relay circuits, cellular, paging,
and Web site design and hosting. For more information, visit their Web site
at www.capsulecom.com.
Other than historical information contained herein, certain statements in
this release are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1994. Forward-looking statements
in this release include statements regarding synergies and growth expected as
a result of the merger, and involve a number of risks and uncertainties,
including, but not limited to, changes in market conditions, government
regulation, the volatile and competitive environment for Internet telephony,
technology, the international communications industry and the global economy;
availability of transmission facilities; management of rapid growth; entry
into new and developing markets; competition; customer concentration and
attrition; the expansion of the global network; and difficulties in
integrating Capsule's business with Startec's business. These risk factors,
among others, are discussed in further detail in the Startec's SEC filings.
SOURCE: STARTEC GLOBAL COMMUNICATIONS CORPORATION
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