VelaTel Global Communications Inc. (VELA); Focusing on Emerging Markets

VelaTel Global Communications Inc. (PINK: VELA) is a holding company of telecommunication carriers. The company currently has stakes in four carrier units; Sino Crossings, Golden Bridge Network Communications, Persusat and Chinacomm Communications. Business Model VelaTel is focusing on combining its engineering and deployment expertise, equity funding relationship, vendor partnership and spectrum, fiber and concession rights assets to create and operate complete networks globally. VELA is looking to deploy telecommunications networks that use Wireless Broadband Access (WBA). VELA is primarily focusing on emerging international markets using either 2.5 GHz or 3.5 GHz radio frequency spectrum. VELA is currently operating in the People’s Republic of China and Peru. VelaTel is also exploring opportunities in other emerging markets such as Russia and India. VELA is looking at opportunities in Singapore, the Philippines, Albania, Caribbean Islands and Southern Pacific Islands and countries in the MENA region. Sino Crossings and Golden Bridge Communications Network VelaTel’s holdings in Sino Crossings and Golden Bridge Communications Network (GNBC) compliment each other. The combination of Sino Crossings and GNBC gives VELA control over an entire network. VELA has a 49% ownership stake in GNBC joint venture. However, VELA has a majority control of the Board, enabling the company to control 100% of the financial activity of the partnership. Peruvian Venture Peru is one of the fasters growing economies in South America. The recent mining boom in Peru has boosted living standards in this South American country. In 2009, the per capital income in Peru was $4,500. Peru also has relatively stable political environment, with a government that has favored foreign investments. Peru is also third-largest country in South America. All these factors make, VelaTel’s venture in the country significant. VELA has a 95% stake in GO MOVIL, a Peruvian telecom company providing voice-over IP (VoIP) telephony. Through its holding in GO MOVIL, VELA controls 2.5 GHz spectrum licenses covering eight Peruvian cities. VELA has recently launched GO MOVIL and expects to generate revenues shortly. Substantial Capital Needed According to a SEC filing made by VelaTel, the company has incurred accumulated losses of approximately $242.36 million since its inception until June 30, 2011. At the end of June quarter, VELA only had $116,000 in cash on its balance sheet and $24.8 million in current liabilities. VELA will have to raise significant capital going forward. VELA is focusing its operations on emerging markets, with low Internet penetration rate. VELA has been making steady progress in Peru. However, the company will have to raise additional capital to sustain operations.