New Delhi: Mobile phone company Vodafone Group Plc. has chosen India’s software firm OnMobile Global Ltd as a preferred vendor to provide music and entertainment solutions in 30 countries, a person with knowledge of the deal said.
The agreement will allow OnMobile easier access to country units of the world’s largest cellular phone services firm and help it to close potential transactions faster, said an industry executive. Both the executive and the person familiar with the matter spoke on condition of anonymity.
Mint couldn’t immediately ascertain the revenue impact of the decision.
OnMobile chief executive Arvind Rao declined to comment on the contract with Newbury, UK-based Vodafone, saying his firm was on silent period ahead of financial results for fiscal 2009.
New avenue: OnMobile chief executive officer Arvind Rao.
Till late Friday, a Vodafone spokesman had not replied to email questions from Mint sent early afternoon.
Shares of OnMobile ended Friday trading at the Bombay Stock Exchange at Rs314.10, up 5.7%. The shares have climbed 29.2% in a week, outpacing the exchange’s benchmark Sensex, which rose 12.1% in the same period.
“This deal puts OnMobile on to a short list for Vodafone’s operating companies across the country, making their products preferred by purchasing managers of the operators. The company also gains preference making for things like global contracts and preferred pricing easier to come in the company’s direction,” said G. V. Giri, an analyst with the institutional equities division of brokerage India Infoline Ltd, pointing out that OnMobile has set a target of 25% of its revenues coming from international customers for the fiscal year ending Tuesday, compared with 15% in the pervious financial year.
OnMobile reported Rs270 crore revenues last fiscal year.
As a percentage of revenues, so-called value-added—non-voice services such as text messaging, Internet access or gaming—offerings account for an average 9% of the telecom industry’s revenues globally, according to Girish Trivedi, deputy director of information and communication technologies at consultancy firm Frost and Sullivan, but is expected to grow rapidly in the years ahead as data-rich offerings are consumed more on cellular phones. There are at least three billion mobile phones in the world today.
Companies such as OnMobile, a company that was spun-off from software services firm Infosys Technologies Ltd in 2000, or Cellebrum Technologies Ltd, have taken advantage of India’s inherent strengths in software services development and a booming mobile phone services market to develop products and services.
Such offerings have, at times, challenged the dominance of phone system vendors such as Telefon AB LM Ericsson and Nokia Oyj in software suites handling, say, text messaging services, ring back tones, and gaming, music or other downloads.
The preferred vendor agreement between Vodafone and OnMobile is not the first such deal. Groups such as MTN Group Ltd, that runs networks in 21 countries, has such an arrangement with Gurgaon-based Bharti Telesoft Ltd from November last year. That deal was to standardise its messaging services across all networks of MTN, Africa’s biggest cell operator.
A group of telecom companies opts for this kind of deal to consolidate and standardize its value-added offerings as this allows scaling up and also bringing down costs for the phone operator, the industry executive quoted earlier said.
“The operators also prefer this kind of deal as it gives a similar and consistent user experience to the subscriber,” he said.