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Goldline gets around

Goldline Telemanagement controls more than half of Canada's $350-million pre-paid long-distance business, a niche market 'you could almost miss on the radar screen'

Mark Evans
Financial Post

Thursday, July 24, 2003

Goldline Telemanagement Inc. is a paradox: Its pre-paid long-distance cards, available at more than 30,000 retail stores in North America, are ubiquitous but its founders are relatively anonymous.

The Richmond Hill, Ont.-based company handles more than 750,000 calls a day; and controls more than half of the $350-million a year business in Canada. But the pre-paid long-distance market accounts for just 1% of the $30-billion telecom market in Canada and its customers tend to be newly arrived immigrants looking for inexpensive long-distance prices.

"This is a market you could almost miss on the radar screen," said Eamon Hoey, a senior partner with Hoey Association. "It is a niche market unsuitable to mass marketers like Bell and Telus."

Privately owned Goldline says it offers low prices and relies on high sales volume to make money. This has struck a chord with retailers, particularly convenience store owners, who like that they can make $2 to $3 commission selling dozens, if not hundreds, of cards a week.

Neda Moeini, who started Goldline with her husband, Ata, said the company has carved out a growing niche in the long-distance market dominated by carriers such as Bell Canada, Telus Corp. and Call-Net Enterprises Inc., because it has reached out to customers in different ethnic communities and meets their needs with services such as a 14-language call centre.

Goldline operates in a market chock-a-block with pre-paid competitors. This can be seen in the windows of many convenience stores, which are plastered with posters that offer information about a variety of pre-paid players.

As the industry grows, an issue that must be addressed is the need for advertising standards. Many posters advertise low prices for international calls but hide additional fees and connection charges in hard-to-read small print.

After the federal Competition Bureau received a complaint about the accuracy of Goldline's advertising, the company was audited last November. Ms. Moeini said auditors spent two days pouring over documents, networks and advertising, but it has has not heard anything since.

Goldline is a classic entrepreneur success story. It was started in 1996 by the Moeinis, who had been reselling long-distance cards for other companies for five years. They launched the business with a US$130,000 telephone switch. Within three months, they had exceeded the switch's capacity.

Goldline's big break was a deal with an Israel carrier looking to build its wholesale business in Canada. With inexpensive rates to Israel, Goldline started selling to Toronto's Jewish community. The Israeli carrier also had attractive rates for calls to Jamaica and Pakistan, which Goldline leveraged by advertising heavily in ethnic newspapers.

"We started with a very good price," Mrs. Moeini said. "We were the first company to change the face of pre-paid."

Seven years later, Goldline sells a million cards a week around the world to customers who use 100 million long-distance minutes a month.

Before Goldline, Mr. Moeini ran a large vacuum bag manufacturing business in Iran. While on a business trip to Germany in 1981, he was told he could not return there because the government was opposed to people of the Bahá'í faith.

With only 5,000 marks, Mr. Moeini leased an old hotel in Frankfurt, and gradually improved it by renovating each room. To encourage guests to make in-room phone calls, he lowered prices to the same level as the big carriers. His interest in the telecom business piqued after he received a fax from a U.S. firm offering deep discounts on long-distance calls.

When a British bank bought the hotel in 1989 and announced plans to demolish it, the Moeinis moved to Toronto to be closer to Mrs. Moeini's family.

While Goldline has thrived in ethnic markets, it is trying to move into the mainstream with easier-to-use services, low prices, and plans to enter new retail channels. The company received a major boost last month when it signed an agreement with Canadian Imperial Bank of Commerce to sell pre-paid long-distance service through the bank's ATMs. Rather than selling cards, CIBC will issue receipts that have a personal identification number that a caller uses after dialing a 1-800 number.

The 240-employee company, whose rivals include PhoneTime International Inc., operates by buying millions of long-distance minutes a month from carriers around the world. When a customer calls a 1-800 number, they use a PIN to connect to Goldline's switch in Richmond Hill, Ont. The call is then routed to the lowest-price carrier.

"Pre-paid is a niche market that requires different attention than traditional carriers can give it," said Mr. Hoey. "Goldline has 125 call centre employees waiting for someone to call. From that perspective, you are talking to your customer base a lot more than the traditional long-distance business. There are niche markets out there better served by smaller companies because they are more hands-on."

A key part of Goldline's strategy is its diversified operations, which include a 25-person research and development unit, and in-house digital printing of cards and promotion material. This gives it the flexibility to quickly change tactics to address new opportunities, and service a growing number of clients looking to sell long-distance cards under their own brands.

With its CiCi and Ola brands well entrenched as popular retail brands, Goldline wants to expand by providing services to other companies. The company recently signed a deal to sell its cards through Canada Post's 27,000 outlets, and it is working on a private-label deal with a large U.S. firm.

"[The Canada Post deal] is huge," Mrs. Moeini said. "They wanted us to test with them for six months. Then, they would decide to launch it in 27,000 outlets. In six weeks, they felt it was successful, and wanted to do it nationally."

©Copyright 2003, National Post (Canada)

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