The collapse of Internet Mobile Communications, also known as Bank of Telecom, has sent shockwaves through the restructuring industry as a £15 million black hole was uncovered in its accounts. The company, which claimed to facilitate the trading of SMS and voice traffic between mobile companies, collapsed into administration two months ago, leaving restructuring experts scrambling to recover funds.
Advisers at Interpath, tasked with rescuing the company, have been struggling to locate millions of pounds that were believed to be in the company’s bank account. Initially, it was reported that Bank of Telecom held over $19 million in its accounts, but upon further investigation, it was discovered that the accounts were nearly empty. The balance at the time of appointment was a mere $1,500, with the account balance never exceeding $4,000.
Bank of Telecom, launched in 2012, had ambitious plans, including a potential $450 million stock market listing in the US. Despite reporting revenues of $677 million last year with just 50 staff, the company faced financial difficulties and ultimately collapsed. The business now owes around £36 million to lender Investec, along with additional debts to other creditors.
The administrators of Bank of Telecom have revealed that the company’s mobile customers still owe £95 million, but contacting these overseas networks has proven to be a challenge. The lack of communication or payments from these debtors has further complicated the situation. One director of the company expressed concerns about the reliability of information from the finance department, indicating potential internal issues that may have contributed to the company’s downfall.
In December 2022, Bank of Telecom announced a merger with Crystal Peak, a Dutch-listed investment vehicle, which would have valued the combined business at $450 million. The deal was terminated abruptly, leading to further questions about the company’s financial stability. The technology offered by Bank of Telecom was praised for its efficiency in telecoms trading, allowing customers to trade voice and SMS routes in real-time from leading network operators.
As investigations into the company’s affairs continue, the administrators are working to uncover the full extent of the financial mismanagement that led to the collapse of Bank of Telecom. While Investec, the lender, is cooperating with the administrators, a source close to the company’s former management has disputed the allegations of a black hole in the accounts. The former chief executive, Mark Stewart, has remained silent on the matter, leaving many unanswered questions about the future of Bank of Telecom and its creditors.
The unraveling of Bank of Telecom serves as a cautionary tale for start-ups in the telecom industry, highlighting the importance of financial transparency and accountability in business operations. As restructuring experts work to recover funds and untangle the financial web left behind by the company’s collapse, the industry watches closely to see how this story unfolds.
