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First quarter subscribers below expectations

Will partnerships save SkyTel from rumors?

On May 13, Jackson-based SkyTel Communications Inc. announced its partnership with eBay, the world’s leading person-to-person online trading organization. Earlier this month, SkyTel introduced eLink, a service that allows unlimited e-mail to be forwarded from the Internet to a wireless pager.

Earlier this year, SkyTel partnered with Office Depot, the nation’s largest seller of office products, to distribute advanced messaging devices and teamed up with ValuePage to develop a program to expand coverage to the small business community.

Even though SkyTel has been aggressive with strategic partnerships of late, subscriber growth for the first quarter of 1999 was below expectations. Although earnings were in line, and a positive net income was reported for the last quarter of 1998, industry analysts have indicated speculation about a possible sale.

Rumors are swirling about possible buyers for SkyTel, and the company recently hired an investment banking firm to explore strategic options.

Questions about lower than expected subscribership were deferred, but the Mississippi Business Journal talked to Kerry McKelvey, vice president of marketing, about SkyTel’s recent strategic partnering ventures, future plans and trends in the wireless messaging industry.

Mississippi Business Journal: You’ve hooked up with some rather notable tech firms, like eBay, to provide wireless messaging systems. Why eBay?

Kerry McKelvey: SkyTel has recognized that there are many people who are going to the Internet to get information, bid on auctions, or do a number of things. Last year, we started realizing people were not only interested in getting news or sports information or other types of highlights on the Internet, but much, much more. We reasoned that it would be very useful to customers to be able to get this information when they’re away from their PCs.

Last fall, we created partnerships with folks like MSNBC or Bloomberg Web sites. Those partnerships proved very successful and people didn’t feel the need to be attached to their PCs. When we contacted eBay, they were very interested in the concept.

We will start offering this program in July.

MBJ: How do relationships like those with eBay potentially broaden the wireless messaging service?

KM: Traditionally, SkyTel distribution has been with Fortune 1000 accounts and we have a very good direct sales force who call on them and sell many pagers to those big companies. But we’ve discovered there’s a lot of value to our product for regular homeowners, small businesses and home business people, so we’ve been looking for other forms of distribution on SkyTel’s product and ways to get them interested in some of the benefits.

For example, we will make the pager available through eBay’s Web site and let users know that there is a pager that can give them this information. Then we’re going to expand it through e-commerce.

When customers click on eBay’s Web site and show an interest, it will go right to SkyTel’s Web site and they’ll be able to buy pagers online.

So, it really helps us expand our distribution very inexpensively and get through to a whole other market that we might not normally have reached through our traditional sales channels.

MBJ: What’s the competition doing?

KM: We’re all recognizing the benefit of linking up with Internet companies. The next step after eBay is to look at some of the Internet companies for online calendars so people can be paged with important meetings, birthdays and other special events.

Also, there’s a real interest in some of the Web sites that sell books and CDs. Using two-way service, a customer can be notified if a certain item has been located for him. The customer can buy it by sending a request through their two-way pager.

MBJ: How can eLink become an extension of the Internet and how will it benefit business folks?

KM: eLink will provide customers with wireless e-mail for those who are not always in front of their computer. That’s great for people in the business community who travel a lot.

We call it a robust service where we can provide unlimited messaging and allow people to forward e-mail through a forwarding device.

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About Lynne W. Jeter

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