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OnMobile Q2-FY13 Concall: CEO Search, New Projects, OnCloud & International Biz

OnMobile Global had reported consolidated profits of Rs 6.22 crore for the quarter ended September 30, 2012 (Q2-FY13), down 87% from Rs 47.72 crore profit in the same quarter last year and down 34.66% from Rs 9.52 crore in the last quarter.

It had reported a total revenue of Rs 179.8 crore for the quarter, up 15.84% from Rs 155.22 crore revenues in the same quarter last year but a minor 2.92% dip from Rs 185.21 crore in the previous quarter. Here are some notes from the OnMobile’s Investor conference call:

– International Revenues: Mouli Raman, Co-Founder and MD, OnMobile said that OnMobile’s International revenues accounted for 59% of the net sales during the quarter, as compared to 42% in Q2FY12. He said that Latin American region had been performing well for the company and it currently has operations in all the 14 countries of Latin America.

He stated that Latin American region accounted for about 23% of their overall revenues and most of these revenues were primarily from RBT (Ring Back Tone) service with more services being rolled out in the region. Raman also noted that they were seeing a 7% to 11% penetration of the RBT service in various markets. Besides this, Raman stated that they are also registering revenues from RBT and M- Radio services for the African region.

New Projects: Raman stated that OnMobile had won a VAS convergence project from Telefonica Spain wherein Telefonica Spain is offering WAP-based content services to its subscribers. While he didn’t disclose the exact deal period or the deal size, Raman noted that the deal extends for more than five years and they expect to generate Rs 30 million gross profit and Rs 60 million gross revenue through this partnership.

He also noted that OnMobile had previously migrated RBT service to Telefonica Spain last year and had registered 50% growth in few months. Going forward, Raman noted that they plan to become an exclusive partner to provide operator-branded content services across all distribution channels including the Internet, WAP, tablet, voice and so on by Q4-FY13. He also mentioned that they are currently in talks with other operators in the Latin American region to roll out its services. Besides this, OnMobile has also inked a deal with a large operator in East Africa to roll out its sports services.

RBT Revenues: Raman stated that RBT accounted for 56% of OnMobile revenues for the first half of this fiscal, as compared to 47% for the same period in the previous fiscal. Raman stated that RBT service is the first product they have sold to operators in many new markets, which contributed to the increase in RBT revenues this fiscal.

OnCloud Services: Raman stated that they have launched the first phase of the OnCloud service with a large operator in North America and are currently supporting 8.2 million users through this service. The company has also launched the service with a large operator in four countries of Europe.

Drop In Indian revenues: Raman stated that the Indian market continues to be challenging and its revenues had dropped during the quarter due to certain contractual changes and continued implementation of the regulatory policies. On the operator VAS front, Raman noted that the company was registering a decline across its messaging, non-data browsing and other VAS services, although it was xperiencing a moderate growth in the data browsing activities.

TRAI’s VAS Directives: Raman stated that they believe TRAI’s recent VAS guidelines, which direct telcos to take explicit consent from subscribers before activating value added services (VAS) on their mobile numbers, is not beneficial for anyone including the consumers. He also said that telcos are currently taking several initiatives to fix the issues raised by TRAI, through which it was observing significant benefits and it believes that the guidelines will become redundant, provided TRAI gives a respite for few months to the VAS companies. That aside, Raman also noted that they are increasing the company initiatives to reach out to the consumer through alternate channels, improve their acquisition engagement and deal with operators in the country.

On Search for New CEO: Tony Haight, Chairman, OnMobile said that their search for a new OnMobile CEO was still going on and they expect to complete it by March 31, 2013. Haight added that they were also expanding the board to appoint two new Independent Board members by March 31, 2013 and were currently in talks with a few specific people for this role. In August 2012, OnMobile Global had split the Managing Director (MD) and Chief Executive Officer (CEO) positions and had decided to appoint two different persons for these positions. It had appointed the company’s co-founder and Executive Director Mouli Raman as its MD, who was previously serving as the Interim MD of the company, after the resignation of OnMobile CEO & MD Arvind Rao in July 2012.

Transfer Pricing Policy in December 2013: Haight stated that OnMobile was currently in the process of rolling out its transfer pricing policy, in consultation with its advisors and it will be implemented in December 2013, with a retrospective effect from the beginning of the current fiscal year, i.e. April 1, 2012. Haight mentioned that this policy will allow the company to gain significant tax savings from its International operations.

Headcount: Rajesh Kunnath, CFO, OnMobile stated that OnMobile had 1,744 employees as of September 30, 2012, with the attrition rate standing at 18%.

OnMobile Q2-FY13 Conference Call Transcript (pdf)


Updated: OnMobile Q2-FY13: Rs 6.22 Cr Profit; Rs 179.8 Cr Total Revenue
– Updated: OnMobile Revenue Up 35.7%, Profit Down 25.5% YoY For Q1-FY13; Charts
– OnMobile FY12 Profit Down 6.8%, Domestic Revenue Down 9%; Declares Dividend
– OnMobile Reports Rs 17.8 Cr Profit On 168.63 Cr Revenues; Products?

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