Onmobile Global* faced a challenging quarter, as it reported a net profit of Rs 3 crore on revenues of Rs 204.3 crore for the quarter ending December 31st 2013 (Q3-FY14). For the corresponding quarter last year, Onmobile had reported revenues of Rs 176.2 crore and profit of Rs 20.6 crore, while last quarter (Q2-FY13), it had reported revenues of 206.9 crore, and net profit of Rs 10 crore. Profit declined due to a one-time payment of Rs 14.4 crores as minimum guarantee, for a contract in Europe. Note that these do not include revenue figures for Livewire (now called Onmobile Live).
EBITDA for the company decreased by 22.8% year on year and 6% quarter on quarter to Rs 33.8 crore.
Content fee and royalty expenditure declined further for the company: on a consolidated basis, it was Rs 35.45 crore, down from Rs 37.68 crore last quarter, although it was substantially higher than the Rs 16.44 crore reported for Q3-FY12.
Last quarter, India revenues were impacted by the TRAI’s double confirmation guidelines, which had led to a 60% drop in VAS activations in the industry. Year to date, India revenues are down 23.2% to Rs 167.2 crore, from Rs 217.8 crore for the same 9 month period last year.
However, in what is an encouraging sign, domestic revenues did not decline for the quarter: they increased by 3.2% quarter on quarter, even though they declined 17.1% year on year. This is as predicted: last quarter, the company had said that ” We’ve seen stability in September, and we expect this to continue.” To be honest, we were expecting much worse, so this is a positive development.
“The impact on (customer) acquisitions has been large, but not as much on revenues. Our impact is not as huge, with respect to the acquisitions, as you have seen. The impact is not lop-sided on any particular services, it’s very consistent, rather than impacting any particular services,” the company had said then.
Year on year, International businesses for the company increased by 34.4% to Rs 152.1 crore, and contributed 74% of the Net Revenue. Quarter on quarter, though, International revenues decreased 2.7% due to softness in Latin America (LatAm), Egypt and Bangladesh.
Bangladesh saw softness in revenue due to the political situation in the country. Onmobile launched RBT services in Bangladesh with an operator, and signed a deal with another operator for RBT deployment. Other Emerging markets revenues were Rs 35.5 crore, up 4.3% year on year from Rs 34 crore, and down 7.6% quarter on quarter. Year-to-date, Other Emerging Market revenues were up 10.8% to Rs 109.5 crore, from Rs 98.8 crore.
For Onmobile, international revenue was primarily driven by Europe and Latin America. Latin America revenues for Onmobile increased 14.6% year on year, even though they declined 10.6% quarter on quarter. LatAm was impacted by “technical issues regarding core and VAS services in Brazil during the first half of Q3”, which have been resolved and, as per the company, the “monthly run rate” is back to normal. Revenue share also declined, driven by volume of business, as per the company’s contractual agreements. In Europe, it reported robust growth with revenues increasing 128.4% y-o-y and 9.7% q-o-q, driven by its “Converged VAS” offering. Year to date, LatAm revenues were Rs 156.6 crore, up 32% from Rs 118.6 crore for the same 9 month period last fiscal.
Onmobile’s Developed Markets segment revenues from were up 87.1% to Rs 67 crores from Rs 35.8 crores for Onmobile, excluding Onmobile Live (Livewire). Including Onmobile Live, revenues from developed markets were Rs 88.1 crore. Onmobile reported a net loss of Rs 8.4 crore, including Onmobile Live. The company says it is in the final stages of integration and migration of Onmobile Live (previously Livewire) which it acquired last year. Livewire has maintained the revenue run-rate it reported in Q2, but EBITDA burn for Q3 was marginally higher at $ 0.7 million on account of separation cost of $ 0.2 million.
Onmobile Live reported net revenues of Rs 21.1 crore, EBITDA of Rs 4.2 crore, and a loss of Rs 11.4 crore. In Q2-FY14, it had reported revenues of Rs 18.1 crore, EBITDA of Rs 2.4 crore, and a loss of Rs 8.5 crore. However, since Q2-FY14 includes financials from July 19th 2013 onwards only (after the acquisition of Livewire), the figures aren’t comparable.
As per an investor presentation dated January 2014 & Onmobile’s earnings presentation:
– Onmobile had 50 RBT telecom operator customers across 35 countries, and was managing over 63 million subscribers
– The company claims to generate 32% of global content VAS revenues for Vodafone. For Telefonica
– It’s present in 15 countries in Latin America, handling over 3 billion calls per month
– Football services in Africa: 3.2 million users, 50% growth quarter on quarter
– AT&T subscriber base for address book backup is 7.5% (in 12 months)
– Apps on Orange have clocked over 25 million users
– In 14 countries with Airtel (in India, Africa and Bangladesh). Generating 25% of overall content revenue for Airtel
– Project Ananya in partnership with BBC, for mobile health, approved by the National Rural Health mission
Disclosure: Onmobile is an advertiser with MediaNama, sponsoring our coverage of the 2G spectrum auctions in February 2014