Internet telephony specialist Coms is launching a new broadband package with Milan-quoted Tiscali as it eyes acquisitions and European expansion.

The fast-growing AIM-quoted company, whose founder-chairman is serial entrepreneur Jason Drummond, offers proprietary voice-over internet protocol technology for smaller to medium-sized companies and argues it can cut call costs between 30 and 40 per cent from other telephony suppliers — and 50 to 60 per cent from standard BT rates. Offering, in addition, lower capital costs, more functions, location independence for phones and outsourced support, London-based Coms, which upgrades its systems every month, still makes gross margins of nearly 40 per cent, says Drummond, whose previous company floats include Virtual Internet and Nettworx.

He suggests continental Europe offers a market where the company could advantageously provide commercial customers with even larger savings. According to Drummond, Coms is talking about a tie with a significant broadband group and contemplating takeovers to expand its customer base at home and abroad.

The company, whose UK clients includes car and leisure products retailer Halfords, John Lewis Partnership, the Legatum hedge fund, the Federation of Small Businesses, Glastonbury Festival and Pinewood Studios, charges £70 to set up its standard hosted internet service, with average monthly revenue per user of £17 and a 45 per cent gross margin. For larger ‘bespoke’ corporate customers, Coms charges an average £4,000 to set up the system and cites average monthly revenue of £1,000 per user, with a 39 per cent gross margin.

Profits have so far proved elusive, with losses rising 29.5 per cent to £860,442 in the year to January despite turnover soaring from £106,000 to £1.3 million. However, it is understood the company is likely to make an operating profit in the current year and broker Daniel Stewart sees pre-tax profits of £150,000 in 2009/10 on a £6.4 million turnover.

The shares, which hit 140p at the end of 2005, have subsequently taken a pounding, to 25p last month. Now 30.5p, valuing the company at £3.7 million, they could have recovery potential for the bold, overall stock market conditions permitting.

Growth Company Investor is the UK’s leading authority on small-cap and AIM companies. You can gain immediate access to all the recent share recommendations with no obligation, with a free 30-day trial. Click here to join today.

Coms	AIM	£0.49m	4.00p	0.00p
Click here for interactive charting
Other company articles:
Coms lines up deals			08/09/2008