News and Views

Happy New Year

I hope everyone had a great holiday season. It’s now back to work for another year of phonecard information. This past holiday season was definitely a disappointing one for phonecard collectors, at least in terms of phonecard promotions. They seem to have peaked in 1995, when most major department stores were offering free cards to get customers in the door. I looked at many ads over the past few weeks, and did not find any stores that were giving away the phonecards. This does not make a lot of sense to me, because back in 1995, most of the people who received the phonecards probably did not know what to do with them. Now that more people are familiar with phonecards, it would seem to be the perfect time to bring people into the stores. Perhaps next year?

American Express Telecom

LOS ANGELES--(BUSINESS WIRE)--Dec. 22, 1997--SmarTalk(SM) TeleServices, Inc. (NASDAQ:SMTK) has signed an agreement to acquire American Express Telecom, Inc., a subsidiary of American Express Travel Related Services Company, Inc. American Express Telecom is a leading provider of prepaid calling products, currently selling phone cards in more than 14,000 locations worldwide. The products include the FirstClass PhoneCard(TM) sold through the U.S. Postal Service and the PhoneFunds(TM) card sold through the National Park Foundation and selected American Express Travel Service Offices.

SmarTalk and American Express Telecom have also signed a joint marketing and technology agreement. Under the marketing portion of the agreement, SmarTalk becomes the exclusive provider of a co-branded prepaid calling card for American Express. These products will be offered under an American Express PhoneFunds SmarTalk brand through American Express wholly-owned Travel Service Offices and stand-alone Foreign Exchange Service Offices. They will be marketed to selected segments of the American Express cardmember base. In addition, SmarTalk will work with the American Express sales and marketing organizations to design additional programs that can be offered through a variety of other distribution channels. SmarTalk also will have the opportunity to distribute the co-branded American Express/SmarTalk cards through its existing retail, tour and travel distribution channels.

The technology portion of the agreement provides SmarTalk exclusive access to the American Express point-of-sale system for activation and recharge of prepaid phone cards. This allows a specially encoded magnetic stripe to be placed on SmarTalk brand phone cards which can be recognized by virtually any merchant point-of-sale terminal.

"The purchase of American Express Telecom is an exciting multi-dimensional opportunity. It encompasses the acquisition of an outstanding business unit and it opens the door to a high-level strategic marketing and technology relationship with one of the premier financial services and marketing companies in the world," stated Robert H. Lorsch, SmarTalk Chairman and CEO. "The successful foundation of American Express Telecom is largely attributable to the people who've worked in this unit, and their obvious commitment to excellence.

"The marketing relationship has the potential to take the Company into a variety of new alternative distribution categories, including travel agencies, while reinforcing our product position at retail, both in the US and abroad," continued Mr. Lorsch. "The technology portion gives retailers the benefit of point-of-sale technology, opening the door for on-site activation and recharge throughout SmarTalk's entire distribution channel."

"We believe prepaid phone cards represent a great growth opportunity -- and one we will continue to pursue in partnership with SmarTalk," said Anne Hopkins, President, American Express Telecom, Inc. "We made the strategic business decision to concentrate our efforts on the marketing and distribution aspects of the business through our retail and direct marketing channels. We look forward to working together with SmarTalk on joint marketing programs which will be mutually beneficial to both organizations."

SmarTalk Vice Chairman and COO, Erich L. Spangenberg, added: "This agreement further demonstrates that we are continuing to execute on our business plan that includes both core business growth and acquisitive growth. American Express has created a solid foundation with their prepaid product. Working from this foundation, we will continue to develop other product opportunities with American Express."

The total consideration being paid to American Express in respect of this transaction is $44 million in cash, which includes the arrangement made under the joint marketing and technology agreement. The transaction will be accounted for as a purchase. The closing is anticipated to occur in the next 90 days. American Express stated that the transaction will not have a material impact on its earnings.

Q-Tip Phonecard

Inside specially marked Q-Tip Cotton Swabs (500 pack) is a 10 minute calling card. Made of thin plastic, Has the Q-Tip Logo and is colored blue like the box. It has an exposed pin, expires 9/30/98. The card producer is Fairfield Telephone Company. Network services provided by STA Telecommunications.

From: Jim Wertheimer

Bell Atlantic / Kodak

I was in another gas station in the NYC suburbs and they had $15 Bell Atlantic phone cards shrinkwrapped with a disposable camera that they valued at $15. In other words it was like getting the telephone time for free. I do not know the particulars on the card since it was shrinked wrapped. The card was Bell Atlantic's multicolor blue motif.

From: Jim Wertheimer

Lowe’s Gift Cards

Lowe's Hardware store offers Lowe's Gift cards in four different denominations. They display them with the Christmas gift stuff. Card is activated upon purchase.

From: Del Deligianis

Bradlees Card

Bradlees is giving out a free 15 minute card with any $50 purchase. Seen in today's newspaper flyer.

From: Andrew Henderson

Cellular One

Today's San Fran. Chronicle contained a little flier covering prepaid cellular services provided by CellularOne *and* the flier pictured a CellularOne Prepaid Service "EasyPay" $30 card. Somewhat of a plain looking card - horizontal layout; left 1/4 grey w/cell phone number buttons pictured, right 3/4 red with white and black writing w/the name of the card, denomination, etc.

From the info. on the back, it looks like Cellular Connection has the greatest number of outlets in the Bay Area. For more info., I'd suggest calling one of their dealer locations (to pull one of them out of a hat , the number for one of their stores is 415-776-9000).

From: Jim Silva

007

TBS is having a sweepstakes in conjunction with the new Bond movie. One of the prizes is a $5000.00 Visa cash card.

From: Andrew Henderson

Michael Jordan / Worldcom

Just wanted to let you know that you can get upto 400 minutes of free phone card time (on Michael Jordan cards) when you sign up with WorldCom through a TPN distributor. Their rates are 10cents a minute 24 hours a day. You get 35 minutes of free calling card time when you sign up and the rest after a year. There is a monthly charge of $3.95 a month. You can sign up by calling tollfree 1-888-290-4876 and giving them TPN id no. 890700015.

Comp USA Card

Comp USA (Computer Store) is offering a Smartalk 30 minute card for $4.99. However, there is a mail-in rebate for $4.99, so it is like getting a 30 minute card free of charge. Limit 1 per customer.

Until Next Week,

Alan

Distribution

Phonecards On-Line is written and distributed by Alan Cohen. It is a weekly newsletter devoted to phonecards - Current news, viewpoints, and reviews of new issues. It is distributed free of charge, and available two ways.

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