Jul. 15, 2009 (The Hindu Business Line) --

BL Research Bureau

The company derived 23 per cent of its 2008-09 revenues from overseas geographies. OnMobile had earlier won a contract with Vodafone (NYSE:VOD) to deploy its VAS products in many emerging markets such as eastern Europe, Africa and Latin America. That (Vodafone) deal, over a three-year period, is expected to contribute 25-30 per cent of OnMobile’s overall revenues. International revenues are thus set to increase contribution to the overall revenues.

The Latin American geography has a mobile penetration of 83 per cent, which creates a larger market for selling VAS products. The present deal envisages delivery of services such as ringback tone, music search and soccer portal for Telefonica’s subscribers in Latin America. Soccer is a popular sport in these countries and is expected to generate rich interest in mobile value-added services relating to the sport.

OnMobile will be deploying value-added services covering 130 million of Telefonica’s subscribers across 13 countries.

Further, Telefonica’s recent quarterly report indicates that countries such as Brazil, Mexico, Chile, Argentina, and Venezuela, its key markets, generate average revenue per user (ARPU) of anywhere between $10-30. This is substantially higher than the $5-6 ARPU that the Indian market generates for its operators. The revenue share with operators such as Telefonica would thus be more lucrative for OnMobile.

With part of the Vodafone deal also involving delivering VAS in Latin America, there may be scope for OnMobile to optimise costs as wellby creating a platform for all value-added services catering to the region.

Both the Telefonica and Vodafone deals are multi-year, multi-country deals. This means that OnMobile will be able to develop high-level implementation expertise, apart from being able to benefit from steady revenue inflows over the long-term revenue.