Today, they are working with Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) unit Rami Levy Hashikma Marketing Communications and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Alon Cellular Ltd. But tomorrow, maybe they will sign contracts with Pelephone Communications Ltd. and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). If you ask Mind CTI Ltd. (Nasdaq: MNDO) founder and CEO Monica Iancu if this is true, the answer would be yes. Mind CTI supplies software solutions for billing and customer service, and has benefitted from the competition changes in the local market.
Mind CTI, which for years has mainly focused on the US market, began working this past year with two Israeli mobile virtual network operators (MVNO). Mind CTI first signed an MVNO cooperation agreement with Pelephone, and then later on with Alon Cellular. Rami Levy Communications reached a cooperation agreement with Pelephone, through which it is working with Mind CTI. If additional companies sign agreements with Pelephone, Mind CTI will supply them with its platform too.
Mind CTI is aiming high. "The day will come when Israeli mobile companies will upgrade their systems, and we will recommend Mind CTI's systems, whose capabilities have already been proven," Iancu says. "Until now, Israeli companies have not been open to talking with relatively small companies, such as Mind CTI, and have therefore paid astronomical prices for their billing services. For example, we approached Mirs Communications Ltd. (which is setting up a new cellular network) and were only able to obtain an appointment with them as a result of a personal connection. We had the feeling as if they were saying to us, 'What right do you have to talk to us?' when all we wanted was the chance to participate in the tender."
So what makes you think it will be different in the future?
"Mobile companies are not as profitable as they once were, so why would they allow themselves to spend millions of dollars on billing? They need to remain profitable. How can they achieve this? One way is to optimize their IT systems."
In other words, you believe that when Israeli mobile companies upgrade their billing systems, they will consider Mind CTI and not just Amdocs, Comverse or Oracle?
"They will definitely consider using Mind CTI, but the question is whether they will have the courage to choose us in the end. We have our foot in the door at Pelephone, and there is mutual respect between the two companies. Our systems there support all Israeli regulations, which is unbelievably complex. Through Alon Cellular, which has a contract with Partner, Partner can also get to know us, and perhaps we will be able to integrate our technology into with the organization in the future."
Mind CTI shares are traded on Nasdaq with a market cap of $37 million, following a fall of 44% from its annual peak. Iancu is the largest Mind CTI shareholder, with 20.7% of its shares. Two large shareholders exercised their holdings this year - PNC Fund and Lloyd Miller III, who though known as an activist, did not try to influence company activity.
Miller held 8% of Mind CTI's shares for three years, during which time the share price rose 600%, and he also benefitted from dividends. "I am sure that there will be others who will also make money from Mind CTI shares," says Iancu.
A year ago, Mind CTI signed a unique agreement with Canadian communications supplier EastLink, which provides billing solutions and customer service on the one hand, and has an option to purchase Mind CTI shares on the other. The share was offered at $2.48 a share, as compared with its current value of $1.98.
EastLink was given 18 months to decide if it was interested in exercising its option to hold 5% of Mind CTI. "We are progressing with our Canadian project, and they have expanded their activity with us, but they have not yet decided whether or not they will exercise this option," Iancu said.
"The reason we offered them the option is we believe that EastLink could become one of our largest clients. The reason they were interested in the option is that they were convinced that during the project, someone would discover Mind CTI and offer to acquire us," Iancu adds with a smile.
It was recently reported that Mind CTI is suing its previous accountants, Kesselman & Kesselman, for NIS 8 million in damages for negligence. The suit is connected with the ARS bond investment, whose liquidity was harmed in the crisis. Mind CTI is still waiting for Kesselman & Kessleman's response.
"The company has experienced difficult periods," Iancu says. "We have had financial problems, which prevented us from focusing on our main goals, and in 2008 we didn't receive even one new order. Now the situation is the opposite - we have the feeling that we have gone up a step, and we are ready for the next one."
Published by Globes [online], Israel business news - www.globes-online.com - on January 8, 2012
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