Earnings Call: OnMobile To Acquire 2 Companies This Fiscal; On Hindi WAP, 3G Services, MCommerce

Some inputs from the hour long OnMobile Global earnings conference call:

Revenues:
— International business accounts for 15 percent of total revenue. The company had revenues of Rs. 70 crores and a net profit of Rs. 12 crores if you exclude VoxMobili numbers. The company took a foreign exchange hit of Rs. 2.5 crores because of deferred payments to VoxMobili
— Top 5 clients account for 75 percent of revenues (down from 81 percent). The company has added 5-6 new international customers in the last few quarters, in the Asia region. There are 4-6 clients in the pipeline, and OnMobile is in talks with all new India carriers.
— 90-95 percent of revenues (without VoxMobili) is revenue share deals. Revenue shares range from 15-25 percent
— Voiceportals contribute 35 percent of revenues(include m-radio, cricket updates, contests, exam results etc)
— Ringbacktones are around 40 percent of revenues. Pricing models for ringtones are changing – now there are subscription models and pay-per-use models

Acquisitions
— Two acquisitions in this fiscal, but not rushing into deals. The first will be within the next two quarters, largely product based and similar to VoxMobili
— Using IPO cash and might raise debt (based on market cap) to fund acquisitions
— Not keen on acquisitions for entering markets, since these tend to have a high premium
— No specific budget for acquisition
— Not looking at acquisitions in India. “We believe that there will be consolidation – the large will become larger, and a large number of smaller players will consolidate.”

More on International markets, 3G, MCommerce, products (local language WAP portals), VoxMobili numbers in the extended text

International Markets, MCommerce, 3G
— In talks with multiple Vodafone (NYSE: VOD) operators worldwide, in talks with 5-6 of them. Something should materialize by end of the year.
— MCommerce is in its infancy in India. There are technology, regulatory and consumer issues. Will take 2-3 years to become significant
— Have launched some products international with other operators in order to test for Indian market. Services are in music, entertainment, location based and database services, which have synergy with existing OnMobile products

Products
— Hindi WAP launched with a Vodafone, is a recent launch so too early to talk about how its done. Have 5 local languages on WAP – Tamil, Telugu, Bengali, Hindi and Malayalam. Should take 12-18 months to reach any significance, since WAP penetration itself is low.
— Mobile Radio (streaming radio on 2G network) with Vodafone
— Launched lead generation initiatives with one carrier, for a percentage from leads.
— Phone backup revenues will kick-in in Q2. In short term, is for international markets

VoxMobili:
— contributed Rs. 31 crores in terms of topline, Rs. 13 crores in terms of bottom line contribution to overall results
— is expected to grow in European market at 35-40 percent. They’re undergoing a business model change. Moving from licensing to revenue share model. Making changes in accounting practices to recognize revenues on a project completion percentage (since it’s a product co)
— Loss this quarter – accounting loss of Rs. 7 crores, expected to even out next year
— Expected to grow faster since it’s earlier in product maturity stage

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