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MTEL READIES TO `INTRODUCE’ SKY WORD PLUS, DEFENDS STOCK SALE

NEW YORK-Mobile Telecommunication Technologies Corp. “is right on target for the (late) April introduction of its SkyWord Plus caller acknowledgement paging,” John T. Stupka, president and chief executive officer, said Feb. 27.

The new nationwide offering, provided over a proprietary narrowband personal communications services system, will provide users with guaranteed delivery of messages through a store and forward capability. It also allows for automatic correction of garbled messages.

Mtel will distribute this new nationwide text service both through SkyTel Corp., its internal distribution subsidiary, and through an expanded network of 20 reseller channels that include: AirTouch Paging, Ameritech Cellular & Paging, Arch Communications Group Inc., Bell Atlantic Mobile Systems, GTE Telephone Operations, MCI Telecommunications Corp. and ProNet Inc.

“We are calling it an introduction,” said Stupka, who joined the company in August, of the pending debut of SkyWord Plus. “The word `launch’ gives Mtel hives, given our experience in 1995.”

Mtel announced late last month it “had been made aware” of a class action lawsuit alleging that the Jackson, Miss., paging carrier misled stockholders in violation of federal securities laws. Between Jan. 19, 1995, and Feb. 22, 1996, the complaint charges the company, its wholly owned subsidiary SkyTel Corp. and seven current and former officers and directors: “disseminated false and misleading statements about the demand for Mtel’s SkyTel two-way and one-way paging services as well as the company’s overall financial health,” said Milberg, Weiss, Bershad, Hynes & Lerach L.L.P., headquartered in New York, the lead plaintiff’s law firm.

The lawsuit, filed Feb. 20 in the U.S. District Court for the District of Columbia, goes on to say: “During the class period, certain of the defendants sold off between 83 percent and 100 percent of their Mtel stock at prices as high as $30.87 per share. On Jan. 22, 1996, when Mtel finally admitted it was unable to provide true nationwide paging service, that [it] had suffered a huge loss of $52 million for 1995, and that the company had violated financial covenants with its lenders, the price of Mtel stock utterly collapsed, falling to $14.12 per share. Thereafter, throughout 1996 … the price of Mtel stock declined to as low as $5 per share.”

In response to the lawsuit, Mtel issued an announcement Feb. 24 that said it “is reviewing the allegations in the complaint, and intends to vigorously defend (itself) in this litigation.”

In a teleconference with securities analysts Feb. 27, company executives said Mtel closed 1996 with nearly 1.31 million paging and messaging units in service worldwide, an increase of nearly 26 percent compared with 1995. Domestic one-way units totaled 1.08 million and two-way units, 29,800.

“Our outlook for this year is good; we are projecting 200,000 new net [customer additions] in advanced messaging and 300,000 net adds overall,” Stupka said. “Our performance vs. expectations has not been good in the past. We are forecasting conservatively.”

Mtel reported a net loss for 1996 of $82 million, or $1.57 per share. This includes a one-time write-down of nearly $39 million, primarily reflecting the company’s staged withdrawal from various business interests in Europe and Asia, said Robert Kaiser, chief financial officer.

“Developing paging operations (overseas) is like drilling for oil,” he said. “We are withdrawing from Europe and reducing our involvement in Asia.”

At the close of 1995, by comparison, the company reported a net loss of $40.4 million, or 79 cents per share, including a one-time charge of $18.3 million in the fourth quarter of 1995 that was associated with deployment of its narrowband personal communications services network.

For the full year, Mtel reported revenues of $350.5 million, a 42.5 percent increase compared with 1995 revenues of $246 million. Full-year 1996 operating cash flow was $7.8 million, compared to a negative cash flow of $16.1 million for 1995 that included the SkyTel two-way launch cost.

To carry out its expansion plans, Mtel also announced renegotiation of a bank credit facility that will give it access to an additional $250 million, $175 million of which already is available.

“Contrary to market opinion, we have come to terms with our bank group for a line of credit that is enough to meet our capital needs for the next three years,” Stupka said.

The chief executive also said he doesn’t foresee a competitive threat from broadband PCS in future years, although this year will be a bit rocky.

“Broadband PCS will be a serious threat to paging in 1997, but in 1998 it won’t be an issue (because) it will emerge as a separate category,” Stupka said. “I encourage you to go to a PCS provider in New York and ask them to demonstrate how to send and receive short messages. We have a nationwide footprint, connectivity to e-mail, the ability to time shift and a lot of functionality they don’t have.”

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