Cellular communications specialist Telit Communications is probing American and Asian opportunities after reducing annual losses 44 per cent to £800,000.

Headed by Israeli entrepreneur Oozi Cats, AIM-quoted Telit increased turnover 16 per cent to nearly £50 million in 2005 on a pro forma basis. The pre-tax loss does not include a £7 million exceptional write-off of a loan made in 2004.

Cats says he expects Telit overall to move into the black this year, thanks to profits on the European distribution of handsets made in the Far East. This division, with a significant focus on Italy, made increased operating profits 11 per cent to £2.3 million on revenues also up 11 per cent, to £41 million.

Longer term, however, he argues growth and profit potential is much greater for the company's other business, which uses 'GSM/GPRS' technology to make wireless machine-to-machine ('m2m') modules. These enable remote machines to communicate with each other and the central communications hub.

The m2m business, which has been developing some of the smallest modules yet seen, increased sales 47 per cent last year and cut its operating loss 25 per cent to £2.6 million. Cats says he hopes m2m will break into profits next year.

Broker Seymour Pierce brought Telit to AIM last year with a £23 million placing at 140p. The company has spent much of that developing the m2m business, but still has about £10 million left.

Cats says Telit is actively looking at possibilities for expansion into the US and Far Eastern markets and, with scant borrowing, will consider joint ventures, acquisitions or other means of entry. The company's continuing losses have seen the shares halve since flotation to 70.5p, but, if Cats' plans work out, they could repay a brave long-term recovery punt.