OnMobile Global‘s quarterly estimates of Mobile Value Added Services (VAS) suggests that there is recovery, in line with Bharti Airtel’s pronouncement of the same for the segment. After two negative (-2.9% and -7.1%) and one flat (0.5%) quarter, Mobile VAS (excluding P2P SMS and GPRS data) for Bharti Airtel, Idea Cellular, Reliance Communications and Vodafone Essar, India’s top four telecom operators, are estimated to have risen by as much as 10.9% on a sequential basis for the quarter ended March 31st 2010; however, year-on-year comparison for the quarter suggests that growth, at least for the big four telecom operators, remained flat.
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On a consolidated basis, OnMobile reported an 11.82 percent increase in total revenues to Rs. 4.54 billion; Industry execs (not analysts) we had spoken to had expected around Rs. 4.5-Rs.4.6 Bn in revenues for the year from the company, so it has met expectations. The revenue growth is despite the company “mutually terminating” its relationship with a telecom operator which contributed over 10 percent of revenues in FY09; contribution from that operator for the year was down to lower single digits; the company also estimated that the impact of TRAI’s guidelines on additional confirmation for “press Star (*) to copy” was 10% for the year; it has significant implications for OnMobile’s RBT product.
However, profit on a consolidated basis was down as much as 50.29 percent, with a 28.91 percent increase in consolidated expenditure.
Remember that OnMobile is in the process of deploying its services in the international markets, with two key multiple-country deals inked with Vodafone and Telefonica: hence it may be that the decline in profitability is due to increased operational expenses made towards that deployment. OnMobile also opened an office in Columbia to facilitate its Latin American operations.
Do also note the considerable difference in employee expenditure between consolidated and standalone results. Deployments with Telefonica are expected to be completed in January next year, but OnMobile CEO Arvind Rao said on the conference call that it appears they might be able to start sooner, by 2-3 months. Deployment has begun, with RBT (RingBack Tone) being launched in Ecuador.
From a standalone perspective, with highlights the performance of the company in India, its revenues from Telecom VAS grew 11.66 percent to Rs. 3.62 billion, but there was a 25.14 percent decline in the company profit. Since listing, OnMobile has repeatedly said that one should not look at their business on a quarter-on-quarter basis, but on year-on-year basis: things aren’t looking good for the company.
And the content costs keep going up. Content costs on a standalone basis:
Product Deployments & New Deals
– RBT: Won a significant new deal for rollout of RBT and related services for a large operator in Western Europe. RBT has also been launched with Vodafone Egypt.
– Signed up three additional large operators in the AsiaPac
– In North America, launched commercially, a wireless based Network Address Book with a large cable company.
– Also in North America we won a significant deal for a complete Personal Data Management solution for a converged operator (three screens).
– Their client-server teliPhone application on the iphone was deployed for an information services provider in France.
– Their Phone Backup application for the iphone was launched in an additional operator in Europe and is available on the Apple Store.
– Developed a speech recognition driven automated CRM service and launched it with a transportation company in Europe.
– Reverse RBT has been launched with an existing GSM operator (ED: Tata Docomo)
– Displaced a competitor (which?) offering RBT for BSNL; “a prominent competitive win back” according to the company.
– BIG FM as a programming partner and launched FM streaming for OnMobile MRadio. (ED: according to our sources, this hasn’t been launched yet, though a competing product – a three-way tie-up between Radio Mirchi, Spice Digital, Bharti Airtel already has)
Significant Product Updates
– Launched SIP-based integration of OnMobile RBT allowing RBT to run on VOIP networks. (ED: Google Voice has a similar monetization opportunity)
– Developed, tested and deployed Reverse RBT
– RBT Provisioning gained an additional mechanism for song selection via USSD – this will enable viral dissemination of new song selection.
– Developed and launched a multi-channel text and voice alert platform for cricket that allowed augmented cricket content.
– Expanded the Phonebook application to Andriod, and PhoneBackup to Blackberry
Note that there are no significant updates on the status of OnMobile’s Developer Network.