OnMobile Global is hosting a conference call, an important call given the recent turn of events. Typing really fast, so please pardon the typos (will edit them later).
1630 hrs: Tony Haight (Chairman): Our focus is on improving our corporate governance. We’re going to have mor eindependent directors, who will check whistleblowers policy, code of ethics. There will be a new delegation of authority matric, and we’ve enganged an independent entity to study our business practices and identifying risk. Senior talent is being recruited for checking regulatory compliance. All existing related party contracts have been terminated. Steps have been taken to ensure that business is not affected.
KPMG: Have been taking care of internal audit at Onmobile for the last few years. We would like to say that the state of internal controls are in the management hands.
Mouli Raman (co-founder and Interim MD): We have been through ups and downs in the past, and have come out much stronger and we’re confident that a similar thing will happen. We have been engaging with employees, customers and partners. We have explained to employees about the way forward and are determined. Existing customers appreciate that what we have done is right and our corporate governance. They have extended their support in continuing the business going forward. We have closed two international deals in the recent past, and we will share more details soon. We dont see losing any deals in the near future. Team members have been given additional responsiblity and we’re looking
Some of the existing shareholders have exited, but some blue chip investors come on board.
We will do whatever is right in the interest of all the stakeholders.
On the business side: We do see challenges. The market is challenging. There’s a lack of an open VAS ecosystem and there are regulatory challenges. It will take considerable effort to make this happen. Besides the operators business, we are looking to provide services to enterprises. We were chosen by the Bill Gates foundatoin for a project, the Ananaya healh project.
In Latin America, we have launched in 14 countries, and the uptake has been positive. Most of the revenues are coming from RBT, and we have a good scope for increasing revenues from RBT, and making the services successful.
In Latin America, we do have some tax related challenges.
Coming to Africa, we have gone live with RBT in 8 countries, and we’re seeing high penetration of 10-15% very quickly.
We have signed an agreement with a large operator to roll out our music on demand services in 9 countries. Our presence in Africa will be in around 14 countries. There is scope for RBT and new services i the market. We are bullish on Africa.
In Europe and North America have been working on a platform called OnCloud, by leveraging customer information, social information, contacts by telecom operators. We have been able to get a large operator in Europe, and are in the process of deploying it with a large operator in the US.
The performance is what matters, and we are going to focus on the basics. We want to make sure that we focus on a few things and do those really well. We are going to focus on the core values of openness, transparency, collaboration, honesty and integrity. We are taking steps to retain top talent, but also are working on attracting some high performers, some of who were with us.
Sanjay Bhambri who was instrumental with our Asia Pacific business has joined us back.
On the products side, our proven bread-winners, RBT and voice based services, and we will continue to exploit these opportunities. Our OnCloud solution, we see an opportunity in advanced markets.
One thing we would like to do is focus on fewer products, and are going through a product planning exercise. We will look to focus on improving our execution, and rollout out projects in multiple markets.
We want to go back to doing the basics right.
Rajesh Kunnath (CFO): International revenue was 56%, domestic revenue declined during the quarter, but we held on to market share. The recent financials of telecom operators indicate that revenues are under pressure. Manpower costs increases QoQ and sequentially. Headcount increased from 1449 to 1668.
Mouli: We are looking at how to share resources across geographies and customers, since we’ve had a vertical structure so far. In some cases, we believe that it will be possible to charge customers directly for services, instead of a revenue share model.
1627 hrs: Rajesh: Our manpower costs are tending to be higher this year, but our objective is to maintain operating margins.
1628 hrs: Mouli: Domestic revenue decline will be in single digits, but higher single digits.
LatAm revenues this quarter was 18.5%. Penetration in key markets is between 6-10%
1633 hrs: “What’s the payback timeframe for investment in the Telefonica deal?” All that we can say is that we are expecting them to be between 600-800 crore over the next five years, and we expect 12-15% operating margin on the same, after incorporating the amortization.
1634 hrs: Tony Haight: My long term goal for OnMobile is for the valuation to be significant multiples for what it is today, and for OnMobile to be the dominant player for providing value to customers. I have no intention of departing from this investment, because it has a great deal more potential.
1639 hrs: MediaNama’s Q&A:
On changes in terms of deals with related parties, namely Mobile Traffik and Riff Mobile: In some cases alternate arrangements have been made, and in others they have done direct deals with telecom operators, instead of going via OnMobile.
On the situation in the Indian market, where telcos are taking subscription engines in-house, and billing being cut: “Operators are implementing policies in terms of increasing thresholds in terms of charging. We’re looking at alternate ways letting the consumers know about services, and improving engagement besides the constraints.”
On Direct to Consumer plans: “At this point in time, our focus is on how to market the services to cosnumers, other than traditional means. Besides that, we do not intend to a full fledged D2C service.”
On moving beyond CRBT and Mobile Radio: “We have text and data based products, like Rich alerts, which are doing well. We are increasing our portfolio.”
Any plans for creating apps for App stores?
“No, we don’t intend to have any apps on app stores, as a standalone apps. Our primary stretngth is in working with operators and working with their strengths.”
On Phone Backup: we are seeing adoption of phone backup in some operators in North America and Europe, where they control the distribution of handsets. In emerging markets, the operator does not control the distribution of handsets.
On Dilithium: we do continue to sell Dilithum on a licensing model in several markets…
(Call dropped, so we couldn’t hear the complete answer)
1655hrs: Any thought on shareholder driven buyback?
No. I’m more interesting in us deploying the money, which is a better use of capital rather than buying back stock.