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Long time VoIP provider closes shop after seven years of losses

After being founded during a wave of national interest in internet telephony, and after losing millions of dollars in investments, Australian company Freshtel has announced it will finally close down its VoIP services and go into mining instead.

When the company first launched in January 2004, most of Australia’s consumers still used traditional telephones connected to Telstra’s PSTN network. Freshtel and rival telecom companies saw huge potential in being able to offer consumers a more flexible and cheaper solution based on IP telephony.

Today that promise has partially been realized — with millions of Australians having used VoIP telephony in some manner, whether through the globally known provider Skype, through a service provided by their ISP, or even through their corporate IP telephony distribution. However, somewhere down the road, pioneers like Freshtel have gone awry as they have struggled to overcome losses.

Freshtel said recently in a statement to the Australian Stock Exchange, the company intended to sell its main technological project for $150,000 and pay its remaining debt, after acquiring Australian Tin Resources, which operates the Ardlethan Tin Mine situated between Wagga Wagga and Griffith in New South Wales. Freshtel will also change its company name to ‘Australian Tin Resources’.

For years, Freshtel has tried several attempts to stem its losses. It has had several new chief executives over time and has been forced to reduce its staff. But, it has also continued to develop new Internet technology — with a focus on diversifying into mobile VoIP and providing such services to call centers.

However, Freshtel’s latest income report, filed for the half-year to December 2010, show a bad financial outlook for the company. In the period, Freshtel made $136,100 in revenue — down from $726,657 in the same period 12 months before, and it lost $226,403. In the same period 12 months prior it had lost almost $2 million. Its cash reserves decreased — the company just had $179,838 on hand, and its share price on the exchange was just 3 cents — down from a high of almost $1 at the company’s heyday in 2006.

News of the sale comes as earlier 2011 Freshtel had indicated that things had gotten so bad that they had leased its VoIP operations to a company named Vixtel for a 12-month period from December in 2010 for a monthly payment of just $2,500 — which Freshtel stated at the time would enable the company reduce further losses and focus on new business opportunities.